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Wednesday February 10, 2010
ResMed: A trading play from Turner
By Mike Turner, editor Mastering the Markets
My advice is to be cautious. However, one stock I believe could take advantage of any near-term market strength and move higher in its own right is ResMed Inc. (NYSE: RMD). ResMed is a medical equipment company with a composite fundamental and technical ranking of 132 out of 200.
The fundamentals are strong for this stock, as reflected in a fundamental score of 67 out of 100. Key factors include the following: The growth rate for total sales for the most recent quarter versus the same quarter a year ago comes in at +23.4%. This compares with a growth rate in its industry (medical equipment and supplies) of -9.8%, and an S&P 500 average growth rate for the same period of +10.7%. The growth rate for total sales for the trailing twelve months versus the trailing twelve months of a year earlier is +12.8%, compared with an industry average growth rate of +1.6% and the S&P 500 average growth rate of -4.7%. The growth rate in sales during the past five years for RMD comes in at +22.1%. The industry's five-year average growth rate is +9.8%. The S&P 500 average growth rate for the past five years is +7.4%. Technically, RMD has been trending higher since early 2009. Both the industry (medical equipment and supplies) and the sector (healthcare), are in bull-mode. This means the average price of every stock in RMD's industry sector is above the trend-line and moving higher. This also means that more money is flowing in to this industry and sector than is flowing out. This is putting pressure on RMD to move higher. However, it is important to note that both the sector and industry have shown some weakness during the past couple of weeks, which could add some additional risk to this trade. Learn more about this financial newsletter at Mastering the Markets. |
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I believe we are approaching what could prove to be a major market correction. Until then stocks could have some wild swings to the upside.