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FTSE 100: 2 stocks to buy in a market slump

A stock price graph showing declines, possibly in FTSE 100
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The FTSE 100 index dipped below the 7,000 mark on Friday and hit a six-week low. Traders are bracing for a market crash and I feel that a slump over the next few weeks is likely. But, I also know that the FTSE 100 index is very resistant and can bounce back quickly if this is the case. At the moment, a dip in the market looks like an opportunity to invest in FTSE 100 stocks at a cut-price for my portfolio. Here I take a look at two tested shares that I think are poised for growth despite the unsteady market climate.

Pharma boom

AstraZeneca (LSE:AZN) was a big winner during the pandemic. Its vaccine, developed alongside Oxford University, was released at a price cheaper than the Pfizer and Moderna counterparts. But, the pharma giant is more than just a vaccine manufacturer.

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AstraZeneca is at the forefront of medical R&D in fields like Oncology, cardiovascular, metabolic, and respiratory disease. Excluding the contribution from the Covid vaccine, revenue increased by 14% to $14.3bn in the first half (H1) of 2021. New medicines accounted for 54% of the total revenue with their sales growing 31% in the H1 2021 to $8.3bn.

I think that a global presence acts as a safety net in unsteady economic times. AstraZeneca’s revenue from emerging markets grew 35%, which is a really positive sign for me as a potential investor. Sales in China grew 21% to $3.2bn. The company also showed strong growth in Latin America, Middle East and Africa.

But the pharma sector poses some uncertainties. Drug patents expire quickly, allowing generic variants to flood the market. With a high portion of sales coming from new medicine, AstraZeneca is susceptible to losing sales to cheaper alternatives in the future. Also, medicine export is strictly controlled by national bodies and licenses can be cancelled at any time, which could impact revenue.

However, AstraZeneca’s track record and consistent R&D makes it a must-have FTSE 100 stock for my long-term portfolio. Its share price is down 5.1% in the last month but I would still wait for signs of a market crash before I invest.

Reemergence of elective healthcare

I am very bullish on pharma and healthcare stock at the moment. Elective healthcare procedures are making a comeback and Smith & Nephew (LSE: SN) stock could benefit.

Smith & Nephew specialises in orthopaedic surgery equipment and surgical devices. As hospitals worldwide recover from the pandemic, non-essential procedures are making a comeback. The company’s financials reflect this as well.

In H1 2021, revenue grew 21.3% (from H1 2020) to $2.6bn with a trading profit of $459m. The second quarter of 2021 showed a 40.3% jump in revenue compared to the same period in 2020. This shows me that the company has recovered well from the impact of the pandemic.

The firm is targeting revenue growth of 10%-13% in 2021 with a margin of 18%. With global surgical activity normalising, I think this is a realistic projection. 

This growth could halt if there is another virus breakout, which remains a concern. But, the recovery looks steady and I think the company’s market performance will reflect this. Also, this FTSE 100 stock is down 7.4% in the last month and a stock market crash could drive prices lower, presenting an excellent buying option for my portfolio.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Smith & Nephew. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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