NEW YORK (TheStreet) -- When I was a boy I remember my grandfather spending a couple of weeks at our family home. Before going to bed he would always fill a little shot glass with some gold-colored liquid from a bottle with a man's name (Jack Daniels) on it.When I asked him why he'd say, "It helps me fall asleep." When I became a teenager I learned what that gold-colored liquid was that Grandpa used it for his nightly insomnia. My personal struggles with sleep are different than Grandpa's. I can fall asleep without much assistance, but I have trouble staying asleep. My doctor diagnosed me with a "sleep-disordered breathing" condition and suggested that I try a bi-level, continuous positive airway pressure (CPAP) machine. Now I can't sleep without it. One of the machines I've used and benefited from is made by ResMed ( RMD), and I've since learned it's an industry-leading company with lots of positive momentum. RMD is a profitable developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing (SDB) and other respiratory disorders. The company's Web site declares the company is "...dedicated to developing innovative products to improve the lives of those who suffer from these conditions and to increasing awareness among patients and healthcare professionals of the potentially serious health consequences of untreated sleep-disordered breathing." Millions suffer from SBD and, as ResMed's Web site states emphatically, "SDB affects around 20% of the adult population, making it as widespread as diabetes or asthma. However, awareness is low and we believe that about 90% of people who have OSA remain undiagnosed and untreated." This is a very serious, life-threatening challenge, and SBD is most commonly related with a condition called "sleep apnea." RMD's Web site explains the opportunities: "Along with an increasing understanding of the morbidity and mortality caused by SDB, this discrepancy has created one of the fastest growing segments of the respiratory industry. ResMed is positioned to meet the growing challenges of this under-penetrated market." This may help explain why RMD's year-over-year quarterly earnings growth was a remarkable 41%. The stock, which closed on Tuesday, at $40.86, is selling for less than 18 times forward (one-year earnings). Yet, its price-to-earnings-to-growth (PEG) ratio (five-year expected) is only 1.06. This indicates shares are still undervalued. Take a look at the one-year price chart with its skyrocketing diluted EPS growth rate. RMD data by YCharts
Its 2.29 PEG ratio (five-year expected) looks high to me even though its supported by an operating margin (trailing 12-month) of 30% and a profit margin of 20%. Optimists might suggest the current fiscal dramas and economic conditions may drive more people to drink, but it would take some tremendous earnings growth going forward to support a PE ratio of over 23. BFB's timely and generous dividend-paying decisions have undoubtedly been one of the big attractions to this stock. By the way, if you have insomnia or SDB, a shot of Jack Daniel's before bedtime is probably the opposite of what you should be doing. In 1959 it may have been my grandpa's only option. Today, thanks to the advances in sleep medicine, there are safer, more effective treatment methods available. At the time of publication the author had no position in any of the stocks mentioned. This article was written by an independent contributor, separate from TheStreet's regular news coverage. Jim Cramer's protege, Dave Peltier, finds you Stocks Under $10 picks with explosive upside potential. See what he's trading today with a 14-day FREE pass.