Here’s a FTSE 100 giant I’m eyeing up for December!

This Fool explains why this FTSE 100 pharma giant is on her radar. She plans to snap up shares for long-term returns and growth.

| More on:
Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.

Image source: Getty Images

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.

One FTSE 100 stock I’m considering adding to my holdings when I next have some investable cash is AstraZeneca (LSE: AZN). Here’s why!

Pharma giant

AstraZeneca is one of the biggest pharmaceutical businesses in the world and is one of the largest firms on the FTSE 100 based on market capitalisation.

Recent economic and geopolitical volatility has thrown up the opportunity to buy shares at attractive levels, in my opinion. Had it not been for recent events, firms like AstraZeneca might be valued at a level where they’re out of reach.

As I write, AstraZeneca shares are trading for 10,106p. At this time last year, they were trading 8% higher, for 11,070p. Interestingly, they’re up 65% over a five-year period. I reckon there’s a chance, once current volatility subsides, the shares could continue their impressive ascent.

The bull and bear cases

AstraZeneca released a nine month trading update a couple of weeks ago. Revenue growth came in at 2%. On the surface, this isn’t particularly exciting. However, this was due to the drop off in demand for Covid-19 vaccines. Let’s face it, this source of income was always going to be temporary. On a brighter note, sales are up 12% and earnings per share up by 10%.

Looking at fundamentals, the shares trade on a price-to-earnings ratio of 17. This looks enticing to me even though it’s higher than the FTSE 100 average of 14. Furthermore, a dividend yield of 2.3% looks good to help me boost my passive income. However, it’s worth remembering dividends are never guaranteed.

Finally, from a growth perspective, AstraZeneca has shifted its focus in recent times towards rare diseases. This could bear fruit for the pharma giant. For example, it acquired Alexion in 2021 for $39bn with a view to boosting its presence in this area. Based on recent results and updates, this is starting to reap rewards. I’ll keep an eye on performance on this front.

To the bear case then. AstraZeneca could find itself suffering the repercussions of disappointing clinical trial results. A prime example of this was the less-than-stellar results from its lung cancer drug, Tropion. Poor results caused the firm’s share price to drop earlier in the year.

Another risk of note that I’ll keep an eye on is acquisitions. Although great to boost growth and profile, when they don’t work out, they can be costly to dispose of and can damage a balance sheet and investor sentiment.

Final thoughts

For me, the rewards outweigh the risks when it comes to AstraZeneca shares. I think that, with a mammoth footprint, as well as great experience, and a solid looking balance sheet as well as an eye on growth, the shares could be primed to soar once macroeconomic volatility cools.

In the shorter term, AstraZeneca shares may experience some speed bumps. However, in the longer term, I believe the cream always rises to the top.

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.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca Plc. 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.

More on Investing Articles

Young Black man sat in front of laptop while wearing headphones
Investing Articles

Which of these is the best dirt cheap FTSE 100 stock to buy for 2024?

I'm building a list of the greatest FTSE 100 stocks to buy for the long term. But are these UK…

Read more »

Investing Articles

What’s on the cards for the BT share price in 2024?

After a turbulent few years, could the BT share price experience a better year ahead and how? This Fool investigates.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Lloyds shares could reach £1.50 in 2024

Lloyds shares rising from 43p to £1.50 in 2024 sounds like a tall order, but here is how the unloved…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

Should investors rush to buy Aviva shares before the end of the year?

The 7.5% dividend yield on Aviva shares is attractive. But Stephen Wright thinks a different FTSE 100 insurer is a…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 UK stocks for value investors to consider buying before the end of the year

Exploiting cyclical downturns can be a great way for value investors to find stocks to buy at bargain prices. Stephen…

Read more »

Young woman holding up three fingers
Investing Articles

I’d earn £1,260 in passive income by investing a £20k Isa in these 3 ultra-high-yield stocks

I'm on the hunt for passive income and I reckon the following FTSE 100 stocks should help me generate it…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

Could these beleaguered FTSE 100 stocks stage a turnaround?

Could these FTSE 100 stocks be primed for recovery after difficult times? Sumayya Mansoor takes a look at what could…

Read more »

Young black man looking at phone while on the London Overground
Investing Articles

Is this FTSE 100 giant one of the best income stocks out there?

Our writer takes a closer look at this medical business as a potential income stock for her portfolio, even though…

Read more »