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Highlights
- Pro Medicus shares have surged by 84.6% in 2024.
- Wesfarmers is 10.6% below its 52-week high.
- Pro Medicus shows strong revenue growth, while Wesfarmers benefits from diversified operations.
Pro Medicus Limited and Wesfarmers Ltd are two ASX-listed companies drawing significant attention in 2024. Pro Medicus shares have surged by an impressive 84.6% since the start of the year, while Wesfarmers’ shares are currently trading 10.6% below their 52-week high. Both companies operate in very different sectors but continue to show strong performance and potential.
Pro Medicus (ASX:PME)
Founded in 1983, Pro Medicus is a leading provider of radiology IT software to hospitals, imaging centres, and healthcare groups worldwide. Its flagship product, Visage, allows radiologists to remotely view large medical imaging files, such as X-rays, on mobile devices, helping to speed up diagnostic decisions and improve patient care.
Pro Medicus’ product portfolio includes radiology information systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualization solutions. These tools support various healthcare processes, from patient scheduling and billing to image interpretation and analysis.
The company's growth has been impressive, with a revenue increase of 33.4% over the past year, which reflects its ability to meet the rising demand for advanced medical software solutions. Although Pro Medicus is a large player, it operates as a growth stock, meaning its share price often correlates with top-line revenue growth. Currently, Pro Medicus has a price-to-sales ratio of 115.02x, compared to its five-year average of 82.69x, indicating its shares are trading above their historical average. This ratio suggests the company’s stock is benefiting from both its revenue growth and investor confidence in its future.
Wesfarmers (ASX:WES)
Wesfarmers is one of Australia’s largest conglomerates, founded in 1914 and headquartered in Perth. The company operates in a wide range of sectors, including retail, chemicals, fertilizers, industrial safety, and more, with its influence spanning across Australia and New Zealand.
Wesfarmers is often compared to a publicly listed private equity company due to its history of acquiring, growing, and selling businesses. A notable example is the acquisition of Coles Group in 2007, which Wesfarmers later spun out as a separate entity in 2018. However, a significant portion of the company's revenue—more than 50%—comes from its ownership of Bunnings, Australia’s leading hardware and home improvement retailer. Wesfarmers originally invested in Bunnings in 1987 and purchased the remaining shares in 1994 for $594 million, making it a cornerstone of its business.
In addition to Bunnings, Wesfarmers owns other well-known brands, including Kmart, Target, Officeworks, Priceline Pharmacy, and Blackwoods. Known for its diversified operations and strong cash flow, Wesfarmers has long been regarded as one of the top blue-chip stocks on the ASX.
Valuation and Outlook
While both Pro Medicus and Wesfarmers operate in different sectors, they both stand out in their respective fields. Pro Medicus’ strong revenue growth reflects its role as an innovator in the healthcare technology space, while Wesfarmers’ diversified portfolio and strategic acquisitions contribute to its status as a stable and established conglomerate.
Pro Medicus, with its high price-to-sales ratio, shows continued investor interest, though its valuation remains higher than its historical average. On the other hand, Wesfarmers remains a key player in retail and industrial sectors, with its consistent performance and portfolio of well-known brands providing ongoing value to its shareholders.
These two companies highlight the diversity of the ASX, offering exposure to both cutting-edge technology in healthcare and longstanding industrial and retail operations. Both are key stocks to watch as they continue to grow and adapt to changing market conditions.
