Some companies come and go. Others build the kind of foundations that make them worth owning for a lifetime.
ResMed Inc. (ASX: RMD) is one of those rare names that sits comfortably in the second camp.
Over the past three decades, the sleep and respiratory care specialist has grown from a small Australian startup into a global medical technology leader helping millions of people breathe and sleep better.
While its share price has had its ups and downs, there are plenty of reasons long-term investors may want to hold ResMed forever. Here are five of them.
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A global healthcare leader
ResMed's products are used by around 160 million people worldwide, and its technology addresses one of the biggest health challenges of the modern age, sleep apnoea. Untreated sleep disorders can lead to serious health issues such as cardiovascular disease and diabetes, making ResMed's mission both essential and profitable.
With strong global distribution, deep clinical expertise, and decades of research, the company has built a near-unassailable competitive position in sleep and respiratory care devices. And as awareness and diagnosis rates continue to rise, ResMed's total addressable market keeps expanding.
Recurring revenue
One of the most attractive features of this Australian stock's business is its recurring revenue stream. Once patients begin using its devices, they need ongoing mask and accessory replacements.
This generates a steady flow of consumable sales that now make up a good portion of ResMed's total revenue. It is a model that creates consistency and resilience, even when device sales fluctuate.
In addition, the company's digital health platform, which connects millions of devices to the cloud, adds another sticky revenue source. This combination of hardware, software, and data gives ResMed a structural advantage few competitors can replicate.
Long runway for global growth
ResMed's growth story is far from over. Sleep apnoea remains underdiagnosed in most markets, and emerging economies represent a massive untapped opportunity. In fact, the company estimates that there are over a billion sufferers of sleep apnoea, with most undiagnosed.
Beyond its core business, ResMed is also expanding into digital patient management, offering data-driven insights for clinicians and healthcare providers. This shift toward software and connected care gives the company a second engine of growth and one that can scale faster and at higher margins than its hardware business alone.
Attractive valuation
Despite rising by 10% this year, this Australian stock's valuation remains very attractive today.
For example, Citi, has a buy rating and a $51.00 price target on its shares, which implies around 25% upside from current levels.
But it isn't alone. Analysts at Macquarie, Canaccord Genuity, and Ord Minnett have the equivalent of buy ratings and price targets implying potential upside of 20%.
Proven management
A fifth reason to buy ResMed shares is its leadership team, led by CEO Mick Farrell.
It has demonstrated a consistent ability to grow profitably while reinvesting in innovation. The company has also shown discipline in capital allocation, funding R&D and acquisitions without compromising its balance sheet strength.
And with a solid pipeline of new products and a culture of steady execution, management continues to steer the company with a focus on sustainable growth.
Foolish takeaway
ResMed isn't a flashy stock. It doesn't chase hype or short-term fads. But it does something far more valuable. It solves a global health problem, generates recurring cash flow, and continues to innovate year after year.
With its attractive valuation, global leadership, and growing digital health presence, it could be an Australian stock to buy, hold, and quite possibly never sell.
