3 Bright Buys In This Brutal Bear Market: AstraZeneca plc, EMIS Group Plc And OptiBiotix Health PLC

Why canny investors should look to AstraZeneca plc (LON:AZN), EMIS Group Plc (LON:EMIS) and OptiBiotix Health PLC (LON:OPTI).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Some of the most experienced investors around (including renowned fund manager Neil Woodford) have long held the view that global economic growth will be sluggish as far ahead as the eye can see. That view appears to be on the mark with downgraded economic forecasts showing a humdrum outlook at best and a potential derailing of the post-financial-crisis recovery at worst.

In such an environment, companies in defensive sectors with relatively dependable earnings and dividends, can provide returns that are hard to come by in other areas of the market. Companies whose growth prospects will be largely determined by their own progress, rather than by the macroeconomic background, can also provide such returns.

Three companies that fit the bill, and which could be well worth buying today, are AstraZeneca (LSE: AZN), EMIS Group (LSE: EMIS) and OptiBiotix Health (LSE: OPTI).

AstraZeneca

Big pharma is a classic defensive sector, although a spate of patent expiries on a crop of the industry’s blockbuster drugs has rather masked the fundamental attractiveness of pharmaceutical giants and dampened their earnings and share-price performances in recent years.

AstraZeneca’s future is beginning to look brighter again as it deals with the loss of patent protection for star turns Nexium, Crestor and Seroquel. Earnings declines are bottoming out, and a promising pipeline of new products, and recent deals, including a majority stake in Acerta Pharma and the acquisition of ZS Pharma, are set to drive strong top-line and bottom-line growth from next year.

At a current share price of around 4,300p, Astra trades on 15 times forecast 2017 earnings and offers a healthy prospective dividend yield of 4.3%, which adds up to a good deal for investors, based on growth projections through to the next decade.

EMIS Group

EMIS is the UK leader in “connected healthcare software and services”, and is well-positioned for growth in a tough environment. Its technology enables clinicians to share vital information in healthcare settings from primary and community care, to high street pharmacies, secondary care and specialist services. The NHS’s perpetual battle to manage costs and improve efficiency provides a strong underpin for EMIS’s growth.

The company has been delivering regular annual top-line and bottom-line growth in double-digits, which is set to continue. However, the shares fell by as much as 16% early today following the release of the company’s year-end trading update. The annual consensus had been for 16% revenue growth for the year, but management said growth came in at 13%, having been held back by the timing of contracts within secondary care, and it also expects to report a partial (non-cash) impairment in goodwill for the division.

However, these negatives appear relatively minor. Overall trading was in line with management expectations, and the company has “maintained its customarily strong revenue visibility, order book and pipeline”. EMIS remains an attractive steady-growth story for all seasons. The shares have recovered somewhat from their early drop today, and the company appears a solid buy at 980p on 19.6 times forecast 2016 earnings with a prospective dividend yield of 2.4%.

OptiBiotix Health

OptiBiotix is very much one of those companies I referred to earlier, whose growth prospects will be largely determined by their own progress, rather than by the macroeconomic background.

This small-cap firm is valued at around £55m at a share price of 73p. It’s a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes. The company has no revenues as yet, but its portfolio of patents on compounds that change the way that microbes in the body work and interact is receiving considerable interest from some big players.

There’s an option agreement on OptiBiotix’s cholesterol-reducing product “with a multinational consumer goods company” (rumoured to be US giant Procter & Gamble). Meanwhile KSF Acquisition, with whom OptiBiotix announced a commercial agreement last week, may not be quite as familiar a name as P&G, but a note at the foot of the announcement reveals that KSF is “an investee of Kainos Capital, with a responsibility for the SlimFast brand in the UK, Ireland and Germany”.

OptiBiotix’s products appear to have considerable promise, and if deals with the likes of P&G and SlimFast progress, this small-cap company should grow rapidly whatever the macroeconomic background.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

£5,000 of 9.2%-yielding Legal & General shares could make me £599 a month in passive income over time!

Legal and General shares remain a top passive income stock in my core portfolio holdings, with a 9.2% yield and…

Read more »

Investing Articles

With a 10.4% yield, P/E ratio of 9.9, and a P/B of 0.37, is this FTSE 100 stock a no-brainer buy for me?

Using a range of popular valuation measures, this FTSE 100 stock appears to offer tremendous value for money. So is…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Down nearly 18% from its 52-week high, is the Lloyds share price now a screaming buy for me?

In recent weeks, the Lloyds share price has under-performed the wider market. Could this be the buying opportunity that I’m…

Read more »

Investing Articles

As BAE Systems’ share price drops 14% should I buy more?

FTSE 100 defence giant BAE Systems recently reiterated strong growth guidance, leaving its share price looking significantly undervalued to me.

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

After an 18% jump on its 2024 results, is it too late for me to consider buying this FTSE 100 hidden gem?

This FTSE 100 technology firm unveiled very strong 2024 results recently and a big share buyback, but is it too…

Read more »

Investing Articles

£5,000 invested in Rolls-Royce shares in 2023 would have made this much by now

Rolls-Royce shares have been one of the best-performing UK FTSE 100 investments over the last two years. But how much…

Read more »

Young Asian woman holding a cup of takeaway coffee and folders containing paperwork, on her way into the office
Investing Articles

£5,000 invested in Lloyds shares in 2023 would be worth this much now

Lloyds shares and other banking stocks have thrived in 2024, but has it been a good investment for shareholders who…

Read more »

Burst your bubble thumbtack and balloon background
Investing Articles

Why are investors blowing a raspberry at this FTSE 250 stock?

After a successful IPO, the share price of this FTSE 250 stock's fallen. Our writer looks at the reasons and…

Read more »