3 FTSE 100 stocks I’d buy for growth in 2022

FTSE 100 stocks can be fast growers too. Roland Head looks at three heavyweights with big growth forecasts, including an Asian growth stock and a pharma name.

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Key points

  • These FTSE 100 stocks are each expected to deliver earnings growth of 17% or more over the coming year
  • They provide access to exciting growth markets including Asian consumers and cutting-edge medicine
  • All three of these stocks appear reasonably priced

Today I want to talk about three FTSE 100 stocks with the potential to deliver sparkling growth in 2022. They’re reasonably priced, too, in my view, which is why I’d consider adding them to my portfolio today.

Healthcare hero

My first pick is pharmaceutical giant AstraZeneca (LSE: AZN). CEO Pascal Soriot has spent the last nine years rebuilding the company’s pipeline of new products.

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This patient approach was needed after previous management left the cupboard bare. But AstraZeneca’s heavy investment in research and development is starting to deliver serious results. Sales rose by 32% during the first nine months of 2021, while underlying earnings climbed 22%. Full-year forecasts suggest 2021 earnings growth of 27%.

There’s always some risk that new medicines won’t achieve the blockbuster success that’s hoped for. But City brokers expect AstraZeneca’s earnings to rise by further 31% in 2022. These forecasts price the stock on 18 times 2022 forecast earnings, with a 2.4% dividend yield.

That’s cheap enough for me to consider the stock as a potential buy for my portfolio.

FTSE 100 stock, pure Asian growth

Over the last three years, FTSE 100 stock Prudential (LSE: PRU) has spun off its UK and US businesses and transformed itself into a pure-play insurer that’s focused on fast-growing consumer markets in Asia and Africa.

One downside of this strategic shift is that the dividend has been slashed and now yields just 1%. There’s also no guarantee that past rates of growth will be maintained.

However, I think the Pru’s results so far look promising. New business sales in Asia and Africa rose by 17% to $2,083m during the first half of last year. Adjusted operating profit for the same period climbed 19% to $1,571m.

Analysts expect the after-tax profit from Prudential’s Asia and Africa businesses to rise by 31% for 2021. In 2022, profits are expected to climb a further 17%. That leaves Prudential stock trading on just 15 times 2022 forecast earnings, which looks modest to me. I’d be happy to consider buying this share at current levels.

Packaging growth play

Internet shoppers caused demand for packaging to boom last year. FTSE 100 cardboard box specialist DS Smith (LSE: SMDS) saw sales rise by 22% to £3,362m during the six months to 31 October. Adjusted earnings per share were 33% higher, at 13.7p.

Broker forecasts for the full year to 30 April suggest this momentum will continue, with earnings of 16.2p per share for the second half of the year (which included Christmas). Of course, these numbers rely on continuing strong demand. Inflation is also a potential risk — the costs of paper and energy have risen sharply.

However, CEO Miles Roberts says that Smith’s has been able to increase its prices. This has offset most of the big cost increases and should protect the group’s profits. Brokers also remain bullish. The City expects to see earnings rise by a further 19% in the 2022-23 financial year.

I think DS Smith looks reasonably priced and should be positioned well for growth. I also like the group’s focus on recycling and the circular economy. I’d be buying DS Smith today if I didn’t already hold a sizeable chunk in my portfolio.

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Roland Head owns DS Smith. The Motley Fool UK has recommended DS Smith, and Prudential. 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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