I bought at $25 in 2021 (from memory) and sold last year when it...

I bought at $25 in 2021 (from memory) and sold last year when it got to $40 after the Philips recall hysteria. The market is often giving us an extreme bull case or extreme bear case. At $40 it was blue skies and an ever-increasing share price ahead. Of course, it's been all downhill since $41; and here we are today... It's the same thing every six or so months with Mineral Resources shares. We wouldn't be going to malls again, and oil & gas would be replaced immediately with renewables, or so we were told in 2020. A narrative gains traction. The madness of crowds.

When everyone is telling you to buy it's often a sign to sell. Unfortunately I missed the lithium gains with my pig-headed contrarian thinking!

Basically, you either believe these pills and injections will replace the need for Resmed devices or you think the hysteria is being blown out of proportion. There's certainly enough articles online about the side effects of the diabetes/weight loss pills. Joe Rogan and Bill Maher's brief discussion on the topic was interesting.


It's just a picture, not a link, and I apologise if l found this on this HC Resmed forum -- l watch and read a lot each day. I was surprised to see a rare good article (Mitchell Lawler, 1st September) on the Mot ley Foo l which was pro-RMD (easily searchable but l can't link to it here). And of course Rudi from FNArena. There's plenty of opposing views, but the market gets carried away and selling begets more selling.

I bought at $24.75 a few days ago and again at $23.50 yesterday. Given the current growth and P/E ratio, it wouldn't take much (only time, and low earnings growth) for the P/E to be in the low 20s. That's Coles or Telstra pedestrian growth at a worst case scenario. As the highly respected Madamswer says on here, if the CPAP machines and associated technology become commoditised, Resmed could always cut back on R&D spending to boost the bottom line. Should the market be wrong, were looking at EPS growth in the teens, plus a healthy PE expansion back to traditional levels from here. In other words, a mid to high $30s if the market is wrong with low expectations. It's my type of bet. And if the market is right, perhaps the drama is already mostly priced in (famous last words!). Surely we wouldn't end up like Ansell (or worse, Bega!) as a market leader and trusted provider of a commodity. I don't think so.

I am sure we have relationships with doctors and hospitals and networks in place that can't be easily replicated. And the TAM worldwide is huge. I tend to think the drug fear is overblown. People won't stay on them indefinitely, they have serious side effects, are not affordable, and plenty of non-obese folks who are undiagnosed will go the CPAP route. I suspect that even if the pills are wonder drugs, and alleviate / cure sleep apnea, Resmed will operate profitably side-by-side with the pills for a long time to come.

A good comparison is of the Resmed and Novo Nordisk share prices to see exactly what's happening:



Good lunch to all holders.