ResMed Inc (RMD)
This manufacturer of medical devices for respiratory disorders recently reported results that beat market expectations. Revenue of $US1.0337 billion for the three months ending on December 31, 2022 was up 16 per cent on the prior corresponding period. We retain a positive view on RMD given an improving supply chain. It will enable RMD to meet additional demand for respiratory units, leading to revenue growth.
Deterra Royalties (DRR)
Deterra holds a 1.232 per cent royalty in BHP Group’s Mining Area C (MAC) involving iron ore operations in the Pilbara region of Western Australia. It gives DRR price and volume exposure to a world class asset without taking on mining risk. The company’s first half result showed production growth at BHP’s flagship asset. We believe the stock is undervalued due to the quality of the asset, its discount to peers and providing investors with a forecast fully franked dividend yield of 6.6 per cent.
APA Group (APA)
The company’s transmission pipelines connect about 1.4 million Australian homes and businesses to natural gas. The stock exhibits defensive characteristics as earnings are mostly contracted and regulated. It can pass on inflation protected price increases to customers. The company has a good track record of growing dividends over time.
This data centre operator’s recent contract wins have increased company contracted utilisation by 35.9 megawatts (MW) since December 31, 2022 to 120MW. The company’s new S3 data centre has benefited the most and is now at 46 per cent of total planned capacity. NXT has lifted contracted MW above forecasts. We expect more deals in the future.
An extreme rainfall event in early March has suspended operations at the Capricorn copper mine, which will impact production. The company reported a statutory loss after tax of $47 million in the 12 months to December 31, 2022. In our view, the company will need copper prices to remain elevated to return to profit.
Transurban Group (TCL)
The share price of this toll road operator has risen from $13.99 on March 28 to close at $14.79 on April 20. The share price appears fully valued, in our view. There was no franking attached to the last dividend. The stock was recently trading on a modest annual dividend yield of 3.55 per cent. Investors may want to consider locking in some profits.