Monitoring Resmed (ASX:RMD) and CSL Limited (ASX:CSL) Share Prices

Entering 2024, the stock prices of ResMed CDI (ASX:RMD) and CSL Limited (ASX:CSL) have witnessed notable movements. ResMed shares have experienced a 13.1% decline, while CSL shares are currently 8% below their 52-week high. This article aims to dissect the reasons behind these fluctuations and examines why investors might consider adding RMD and CSL shares to their watchlists.

ResMed (ASX:RMD) – A Global Player in Medical Equipment

Established in 1989 by Peter Farrell in Australia and currently headquartered in San Diego, California, ResMed is a medical equipment company specializing in cloud-connectable continuous positive airway pressure (CPAP) machines. These devices are designed to treat obstructive sleep apnea (OSA). With a global presence spanning over 140 countries and a workforce exceeding 10,000, ResMed operates through two primary business units: Sleep and Respiratory Care, and Software as a Service (SaaS). Its innovative approach integrates industry-leading hardware with SaaS data to derive insights, enhance outcomes, and reduce overall healthcare costs.

Despite its size, ResMed CDI is categorized as a growth stock, necessitating a unique set of valuation considerations. Revenue growth, a pivotal metric for growth companies, stands at an impressive 12.6%. The stock's valuation can be gauged by comparing its price-to-sales ratio over time, currently at 4.04x, below its 5-year average of 7.81x, indicating potential value.

CSL Limited (ASX:CSL) – A Global Biotechnology Giant

CSL is a prominent global biotechnology company dedicated to developing and delivering innovative medicines that save lives and improve public health. Its three main business units – CSL Behring, CSL Seqirus, and CSL Vifor – play integral roles in manufacturing and distributing blood plasma products, flu-related products, and offerings for iron deficiency and nephrology.

CSL's plasma collection unit, CSL Behring, is a critical component, creating life-saving treatments for individuals with serious illnesses globally. The company's reliance on plasma and blood collections, coupled with strategic acquisitions, positions it as an indirect play on the rising trend of healthcare spending.

Share Price Valuation

As a growth company, ResMed CDI's price-to-sales ratio of 4.04x is notably lower than its 5-year average of 7.81x, suggesting the shares are currently trading below historical levels, potentially presenting an opportunity for investors.

In contrast, CSL, being a more mature business, offers a historical dividend yield of approximately 1.25%, aligning with its 5-year average of 1.24%. For investors seeking a more comprehensive valuation approach, models like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM) can provide nuanced insights into the CSL share price.

Conclusion

Navigating through 2024, the trajectories of ResMed CDI and CSL shares present intriguing opportunities for investors. While ResMed's growth story is reflected in its impressive revenue growth and a currently discounted price-to-sales ratio, CSL stands as a stalwart with consistent dividends and a strategic position in global biotechnology. Investors are encouraged to conduct thorough research, considering various valuation models, to make informed decisions aligned with their investment goals. Adding both RMD and CSL shares to your watchlist could be a prudent move as you navigate the dynamic landscape of the stock market in 2024.