Here’s how ResMed Inc (ASX: RMD) and 2 other shares have outperformed their sectors by miles in the past month.
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The past month has been a busy period for the share market, with headline news such as the coronavirus vaccine success, the United States election, and the lifting of restrictions gracing our front pages. Some share prices were notably adversely affected by the news, but many reacted positively as the ASX surged ahead by 8% just in the last week of trading.
Let’s take a look at 3 shares that have strongly outperformed their respective sectors during the past month.
Coca-Cola Amatil Ltd (ASX: CCL)
Coca-Cola Amatil’s recent share price move has been largely driven by the $9 billion impending takeover from Coca-Cola European Partners (NYSE: CCEP). The latest offer from the European giant came at $12.75 per share, and Coca-Cola Amatil’s share price has been hovering around that level since late October. The Australian beverage maker is still mulling over this offer price, and analysts believe that CCEP may have to increase its price to win over investors who believe the bid is too low and doesn’t reflect recent efforts by Amatil to restructure its cost base.
The Coca-Cola Amatil share price has risen by 22% this month to $12.70 at today’s trading, driven by the anticipation that the $12.75 offer could be accepted by shareholders. In comparison to the overall sector, the ASX 200 Consumer Staples Sector Index (ASX: XSJ) has risen by only 4% during the past month.
Oil Search Limited (ASX: OSH)
Oil producer Oil Search has not had a fantastic FY20, releasing a rather downbeat Q3 trading update in October. In that announcement, it reported a 29% fall in revenue to $189 million, which was a 47.6% decline on the third quarter of FY19. At the time, the company said that COVID-19 had severely impacted its business, and that it did not expect LNG demand to fully recover until 2027.
However, the Oil Search share price received a strong boost last week when Pfizer Inc (NYSE: PFE) announced clinical trial success on its COVID-19 vaccine. The vaccine news triggered asset price rises on multiple fronts, including the Brent Crude oil price which also rose by 10% since the news broke out. The increase in oil price has been the main catalyst for Oil Search’s strong price performance.
The Oil Search share price has risen by 30% in past month, compared to the sector’s average return of 13%, as measured by the ASX Energy Sector Index (ASX: ZEJ) – giving it an outperformance of 17% over the sector. Oil Search shares are trading today at $3.76.
ResMed Inc (ASX: RMD)
Sleep-treatment device company ResMed has had a great month, in which its share price increased by 19%. The catalyst for this latest gain has been the recent release of a first quarter update which smashed expectations. In that announcement, Resmed reported a 10% increase in revenue to US$751.9 million. Management advised that it was experiencing strong demand for ventilators because of the COVID-19 pandemic.
More importantly, the share price of ResMed kept rising even after the vaccine news was announced. In fact, ResMed’s share price was given an upgrade, as analysts at Credit Suisse believe the company is well-placed for growth. They have upgraded ResMed’s shares to an outperform rating with a $31.00 price target. The analysts believe ResMed is well-placed to benefit from a shift to home healthcare following the pandemic.
ResMed’s share price’s return of 19% has beaten the health-care sector return during the past month by 14%, as measured by the ASX Health Care Index (ASX: XSJ). ResMed’s share price is currently trading at $55.80.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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