With the stock market having a bit of a tantrum lately courtesy of inflation, I’ve been on the prowl for the best shares to buy now for the next 10 years. For many, investing at a time when prices feel like they’re in freefall may sound ludicrous. But history has proven time and time again that buying during a bear market can lead to substantial wealth generation. That’s why I’ve already gone shopping and plan to continue doing so over the next weeks and months.
But that doesn’t mean buying anything with a low share price is a sensible move. After all, plenty of cheap-looking stocks today are priced that way for a good reason. There are multiple factors wreaking havoc on operations for certain industries. And those that loaded up on debt during the height of the pandemic are especially in trouble now that interest rates are rising.
However, with most investors panicking, plenty of high-quality companies have suffered double-digit share price declines despite business still booming. Needless to say, that creates a buying opportunity for my portfolio. And I think I may have identified some of the best shares to buy at the moment.
The best shares for today?
I recently took a gander at a sector virtually unaffected by rising inflation – healthcare stocks. Regardless of what’s going on in the economy, healthcare is an essential consumer expense for those unfortunate to be battling illness.
There are plenty of high-quality companies in this arena. But one that’s caught my attention today is Hikma Pharmaceuticals (LSE:HIK). The firm is the second-largest generics manufacturer in the world. It recreates existing drugs that have come off patent to improve the availability and affordability of treatments, especially in the US.
So, why is the firm on my best shares to buy now list? Since the start of 2022, the stock has dropped by around 23% after management downgraded revenue guidance for this year. However, upon closer inspection, this was caused by a delayed contract that should be realised in 2023 rather than a permanent loss of income. In other words, investors may have overreacted, creating what I believe is a buying opportunity for my portfolio with a proven high-quality business.
Taking a step back
There are risks, of course. Healthcare is a highly regulated industry that’s notorious for its difficulty in launching new products. But a more immediate threat is what’s going with profitability. The group’s profit margins have been suffering from product price erosion since 2020 as competition continues to rise.
Obviously, that’s not good. However, it may only be temporary. Management has begun to focus heavily on expanding its high-margin injectables business, where the group commands more pricing power. Furthermore, it’s also started forming partnerships to create biosimilars – the generics equivalent for biotech drugs. Based on current analyst forecasts, the biosimilars market is estimated to grow at a 15% annualised rate until 2030!
Pairing these new growth avenues with Hikma’s track record of delivering value to shareholders and its established global network makes me cautiously optimistic about its future potential. Therefore, despite the risks, I believe Hikma Pharmaceuticals is one of the best shares to buy now and hold for the next decade.
