It’s the end of the world, folks. Well, that’s what the fear-mongering media would have you believe, anyways. As I discussed in Thursday and Friday’s Market 360 articles, the media is manipulative and despite the market volatility there are investing opportunities.
While a lot of investors are sitting on the sidelines right now, there are also those pouring into the companies they consider the “coronavirus stocks.” As we talked about last week, these are the companies that sell household products, the health services and biotechs, the drugstores, the telework stocks and the miners of precious metals.
In general, I’ll be taking my cues from earnings season and analyst revisions. If we get good news, that’ll be the “all-clear signal” for growth investors. Timely stocks might see a bump right now, once the quarantine is lifted and folks can get back out and about again – but, even so, you only want to own the best ones. The companies that don’t have the long-term fundamentals to continue driving them higher after we put this health crisis behind us will eventually fall.
As a numbers guy, I only invest and recommend stocks with superior fundamentals and the staying power to continue growing even after the dust settles. I’m not very interested in investing in the “fads.”
With that being said, if you twisted my arm, I’d say a good company to consider as a “coronavirus stock” is ResMed, Inc. (RMD).
The company specializes in solutions to manage respiratory disorders and diseases, which is in increasing demand due to the coronavirus. The company is working with hospitals, doctors and health authorities to provide ventilation supplies to patients who need it. Around 6% of patients with the coronavirus need breathing assistance and ResMed is ready to deliver.
In fact, RMD CEO Mick Farrell stated, “We are working with governments, health authorities, hospitals, physicians, and patients worldwide to assess their needs, and to deliver the ventilation therapy that is essential to treat the respiratory complications of COVID-19.”
I recommended RMD in Growth Investor in February 2020, but it had nothing to do with the coronavirus. Here’s why…
Consider this: About 42 million Americans are impacted by sleep-disordered breathing, or, in other words, a form of sleep apnea. Sleep apnea occurs when breathing either stops or slows dramatically when sleeping. And, as you may have guessed, it can have serious health repercussions.
Not only are adults who are diagnosed with sleep apnea more susceptible to depression, headaches and lack of energy, they’re also more at risk for suffering a stroke. About 65% of stroke patients were also diagnosed with sleep apnea.
The good news is that there are products to help patients with sleep disorders.
Back in 1981 in Australia, Professor Colin Sullivan and his colleagues at the University of Sydney developed the first non-invasive treatment for sleep apnea. The CPAP (Continuous Positive Airway Pressure) device helps keep a patient’s airway open while they sleep.
In 1987, Dr. Peter Farrell invested in Sullivan’s CPAP device on behalf of Baxter Centre for Medical Research. But, when Baxter declined to further pursue the sleep apnea market, Farrell purchased Sullivan’s technology and founded ResMed, Inc.
Today, ResMed, which is short for Respiratory Medicine, manufactures CPAP masks, machines and other life support ventilators for in-home use. With operations in more than 120 countries around the world, the company strives to help individuals with chronic respiratory diseases. And it hopes to touch more than 250 million lives by 2025.
ResMed has more than 100 million people in its digital health network, with more than 15 million using a ResMed device, 10 million cloud-connected devices on the market and two million myAir users.
But as I said, the fundamentals need to be strong before I recommend a stock. And RMD delivers here, too. For the second quarter of 2020, revenue increased 13% year-over-year to $736.2 million, and earnings jumped 22% year-over-year to $176.3 million. Earnings per share rose 21% year-over-year to $1.21 per share, which beat analysts’ forecasts for $1.02 per share by 18.6%.
The bottom line: RMD is sure to be more in demand during the coronavirus pandemic, but it also has the staying power to continue climbing over the long term. And those are the only stocks I will ever invest in.
RMD isn’t the only stock I like right now. In fact, I recommended a Chinese company in my Growth Investor Monthly Issue last week. It has astounding growth prospects. I’m talking 423.5% earnings growth, year-over-year, and 512.6% revenue growth in the first quarter!
Analysts have also upped earnings forecasts by a whopping 242.3% in the past two months alone, so a fifth-straight quarterly earnings surprise is likely.
That link includes my free briefing on a much bigger story than any single online retailer: the worldwide upgrade to 5G wireless.
With the 5G infrastructure market set to grow at an annual rate of 67% over the next 10 years, the entire market will go from $780 million to nearly $48 billion.
Cable companies can do their best to fight back with fiber optics … but they can’t compete with the convenience of a smartphone, once it’s got ultra-fast 5G. That’s how 5G infrastructure companies will capture more market share from the broadband cable companies.