ResMed - Downside Target Hit, Ready to Rally

by Michael Gable

We wrote about ResMed a few weeks ago for clients (25th March 2014) and the stock fundamentally looked appealing because of the following characteristics:

1. Leveraged to sleeping disorder volumes due to higher obesity rates in developed nations
2. High product gross margins (> 60%) 
3. Returns above the cost of capital (ROA > 15%)

We’ve looked at RMD a couple of times in the last 6 months. On 6th of November here on the Finance News Network we warned of a drop in the share price to under $4.80. We have finally seen RMD break the downtrend. We have circled this break on the chart. Now that the shorter term downtrend is broken, it should resume the longer term uptrend, which implies levels up towards $6. Before then, we expect some strong resistance between $5.60 - $5.80.


Disclaimer: Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.