The Motley Fool

Why AstraZeneca stock is a buy right now

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.

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Image source: Getty Images

Right now is the perfect time to get into healthcare stocks, with the industry growing rapidly, accelerated partly down to Covid-19. I believe AstraZeneca (LSE: AZN) is the perfect stock to invest in when it comes to pharmaceuticals and healthcare. Having been founded in 1999, it is fair to say the company is not going anywhere and has forged itself into history with its research and findings.

Here are three reasons for me to invest in AstraZeneca:

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Its growth is organic

The company’s growth is unexpected after 20 years of not meeting Wall Street’s expectations. The company’s oncology and cardiovascular drug segments are doing extremely well. The cancer drug trio of Tagrisso, Imfinzi, and Lynparza is consistently growing year-over-year sales by a double-digit percentage, with next-generation type 2 diabetes drug Farxiga delivering 60% sales growth through the first half of 2021. None of these four blockbuster drugs show signs of slowing down anytime soon.

It’s a healthcare stock

To start with, it is a healthcare stock and healthcare companies are highly defensive. We don’t choose when we get ill and what type of illness we may develop. That essentially allows pharmaceutical companies constant work and income. Typically, demands for drugs, devices and healthcare services remains the same regardless of the state of the economy and thus it is a safe bet against a drop in the state of the economy.

To boost this, AstraZeneca offers a 2.56% dividend, which in the current market is very good in my opinion. This is an added bonus to a company whose stock price is up 118.31% in the last five years (as of 6th November). The 2.56% dividend yield is well above the S&P 500 average of 1.3%.

The smart acquisition of Alexion Pharmaceuticals

And thirdly, AstraZeneca made one of the smartest acquisitions in the pharmaceutical space. In July, it closed a cash-and-stock deal to purchase ultra-rare-disease drugmaker Alexion Pharmaceuticals for $39 billion. The biggest buyout in the company’s history lands it a company that faces little competition in the indications it serves.

Even more importantly, Alexion developed a second-generation therapy for its blockbuster drug Soliris. This treatment, known as Ultomiris, is administered less frequently than Soliris, and should have an opportunity to siphon sales from Soliris over time. In other words, Alexion secured its cash flow from potential generic or biosimilar competitors for probably another decade. Alexion also has many other drugs in its portfolio that treat rare conditions and this will be a great asset for AstraZeneca to have.

With sustainable low double-digit sales growth, I am likely to add to my position in AstraZeneca in the next month.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Ed Jones owns shares in AstraZeneca. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.