Ramsay Health Care Ltd (ASX: RHC) shares are edging lower today.

Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock closed yesterday trading for $55.56. In morning trade on Tuesday, shares are changing hands for $55.49 apiece, down 0.1%.

For some context, the ASX 200 is up 0.2% at this same time.

Taking a step back, Ramsay Health Care shares have surged 75.9% since this time last year, smashing the 12-month 1.9% losses posted by the benchmark index.

And that’s not including the two fully-franked dividends, totalling 91 cents a share that the ASX 200 healthcare stock paid out over the full year. At the current share price, Ramsay Healthcare trades on a fully-franked trailing dividend yield of 1.6%.

Despite that strong outperformance, Merlon Capital Partners co-portfolio manager Joey Mui believes the stock is still undervalued (courtesy of the Australian Financial Review).

Here’s why.

ASX 200 healthcare stock with further upside

Asked which stock his fund owns that’s most undervalued by the market, Mui pointed to private healthcare provider Ramsay Health Care.

“We believe Ramsay is still significantly undervalued,” he said.

Explaining his bullish outlook on the resurgent ASX 200 healthcare stock, Mui said:

The market has been cautious about its ability to offset inflation, but we see a strong opportunity to lift margins – through higher theatre utilisation, a better mix of specialities, and cost indexation from insurers. The new management team under Natalie Davis is executing on these strategies well.

What’s the latest from Ramsay Health Care?

Ramsay Health Care shares closed up a blistering 13.7% on 27 August, following the release of the company’s full-year FY 2026 results.

For the 12 months to 30 June, the ASX 200 healthcare stock reported underlying earnings before tax (EBIT) of $1.16 billion, up 11.5% year on year.

And on the bottom line, Ramsay achieved an underlying net profit after tax (NPAT) of $364 million, up 19.3% from FY 2025.

Commenting on the strong results, Ramsay Health Care CEO and managing director Natalie Davis said, “FY26 was a year of continued improvement and delivery for Ramsay, with group underlying NPAT up 23% (in constant currency) year-on-year, all regions delivering EBIT growth, high patient NPS and clinical excellence across the group.”

Looking to what’s ahead for the company in FY 2027, Davis added:

We will continue to build on Ramsay’s clinical excellence in Australia for the benefit of our patients, by investing in clinical innovation and connecting hospital and healthcare services in our priority therapeutic areas – cardiology, orthopaedics and cancer care, to be Australia’s most trusted leading healthcare provider and to grow long-term shareholder value.

The post Expert names ‘undervalued’ ASX 200 healthcare stock to buy today appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

October is almost here, and National Australia Bank Ltd (ASX: NAB) is one ASX bank share I would be happy to buy.

With NAB shares trading around $39.13, I think there is a solid case for adding them to a portfolio next month. Here is why.

A solid earnings outlook

I would not expect explosive growth from NAB. Consensus forecasts point to earnings per share (EPS) of $2.38 in FY26, rising to $2.54 in FY27.

At today’s share price, that values NAB on a PE ratio of around 16 times FY26 earnings and just over 15 times FY27 earnings.

I think that is a reasonable price for one of Australia’s largest banks, particularly given NAB’s strong position in business banking.

That part of the company is one of the main reasons I like it. Australian businesses need banking services across lending, payments, deposits, and other areas, giving NAB another avenue for earnings beyond the highly competitive mortgage market.

What could higher interest rates mean?

The prospect of further Reserve Bank of Australia interest rate rises complicates the outlook somewhat.

Higher rates can be positive for banks if they allow lending rates to rise in a way that supports net interest margins, which measure the difference between what a bank earns on loans and pays for its funding.

But there is another side to that equation.

Higher borrowing costs put more pressure on households and businesses. If rates climb too far, credit growth could slow, customers may become more cautious about taking on debt, and bad debts could eventually increase.

Competition also plays a role. Banks cannot simply assume that every increase in the cash rate will translate into better margins when they are competing for both borrowers and deposits.

For me, that means another RBA rate rise would not automatically strengthen the NAB investment case.

I would instead focus on how the bank manages margins, credit quality, and lending growth through the changing rate environment.

The dividend adds to the case

Passive income is another reason investors may be interested in NAB shares.

Consensus forecasts point to fully franked dividends of $1.70 per share in FY26 and $1.72 in FY27.

At $39.13, the FY26 forecast represents a dividend yield of around 4.3%, before including the benefit of franking credits.

The expected increase in FY27 is small, but the important point for me is that analysts currently expect the dividend to remain well supported with manageable payout ratios of around 71% and 68%.

Foolish takeaway

NAB is not the sort of share I would buy expecting spectacular growth over the next 12 months.

What I see instead is a major bank with a strong business banking franchise, a reasonable forward valuation, and a fully franked dividend that could provide an attractive income stream.

Interest rates could make the next year a little more complicated, particularly if borrowers come under greater pressure. But at around $39, I think there is enough in NAB’s favour for me to be comfortable adding the shares in October and holding them for the long term.

The post Why I’d buy NAB shares in October appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Codan Ltd (ASX: CDA)’s value has surged past $10 billion, up more than 15% just today, after the company announced a large profit upgrade just three months into the new financial year.

Firing on all cylinders

The technology manufacturer has two main divisions – metal detection and military communications – with both expecting to grow significantly over the full year.

Codan had already issued a trading update on 20 August, saying strong demand for unmanned systems meant that its communications division expected to significantly exceed the previous year’s performance in the first half.

The company said on Tuesday that orders had continued to strengthen during the first quarter and it now had better visibility for results through the second quarter.

Codan said demand outside of conflict regions was strong, and revenue was expected to be up 20% on the previous corresponding period, “with broad-based growth across regions and markets reinforcing the global relevance of our technologies”.

The company added:

Demand from conflict regions is currently exceptionally strong, reflecting the proven performance and reliability of our technology in these contested environments. With this elevated demand, Codan expects revenue generated from conflict regions to represent approximately 50% of Communications segment revenue in H1 FY27 (vs. approximately 20% in the previous corresponding period). Codan now expects the Communications segment to deliver H1 FY27 revenue of between $400 million and $410 million. This compares to $221.8 million in the pcp and $506.2 million in full year FY26.  

The strong demand could also translate into a better EBIT margin of about 40% in the first half, compared to 26% in the first half last year.

Codan said demand from conflict regions was difficult to predict over the full year, “and accordingly it is too early in the financial year to determine if demand and margin will continue at similar levels in H2 FY27”.

Metal detection also performing well

The Minelab metal detection division was also performing strongly, driven by demand for the recently launched GPZ8000 and Gold Monster 2000 detectors, Codan said, as well as by the favourable gold price.

On August 20, Codan said that Minelab was tracking broadly in line with second-half FY26 levels.

Minelab’s revenue run rate is now slightly above those levels, Codan said.

In terms of group profit, Codan is expecting a net profit of not less than $160 million for the first half, compared to $71.2 million in the first half of FY26 and $175.2 million for the full year.

Codan shares traded as high as $61.30 before settling back to be 16.8% higher at $60.73.

The post This ASX tech company just surged past the $10 billion valuation mark after a major profit upgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.