Warren Buffett famously said: “If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.” A self-invested personal pension (SIPP) is perfect for this mindset.
That’s because it allows me to tax-efficiently save, invest and build up a pot of money for retirement. And that might be a decade or more away.
Here are two quality FTSE 100 stocks I’d buy for a SIPP today.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
The biggest fish
To start, I’d go with the UK’s largest company by market capitalisation: AstraZeneca (LSE: AZN). The pharma giant is just ahead of fellow Footsie heavyweight Shell in the rankings.
The stock has more than doubled in five years and nearly trebled over a decade. A combination of smart leadership, shrewd acquisitions and surging top and bottom-line growth have all driven this performance.
In 2014, the drugmaker set a target of reaching more than $45bn in revenue by 2023. Having achieved that, it’s now aiming to grow revenue to $80bn by 2030, which would be a rise of 75%.
It expects to launch 20 new medicines by then, as well as increase sales from its massive existing oncology, biopharmaceuticals, and rare diseases portfolio. And it’s targeting a mid-30% core operating profit margin, up from 28% in 2020.
While I wouldn’t bet against all that happening, the company can be hit by late-stage clinical trial failures. That’s just the nature of the beast here, as are potential litigation and regulation issues.
Nevertheless, AstraZeneca’s driving ambition is to transform oncology by replacing traditional treatments like chemotherapy and radiotherapy with more targeted treatments.
This is a vision I’m invested in myself, having added Astra shares to my portfolio a few months ago.
To my mind, an ageing global population and rising cases of cancer should naturally lead to the company becoming more valuable over time.
The journey won’t always be smooth, but this is a FTSE 100 stock I’d want in my SIPP for the long haul.
A world-class data firm
Next up, we have Experian (LSE: EXPN). This is one of the world’s largest credit reporting agencies. It provides data and analytical tools to lenders around the globe to help them make informed decisions.
Like AstraZeneca, this stock has been performing very strongly. It’s up 26% over the past year, easily outperforming the wider FTSE 100 in the process.
There are a few reasons I like Experian. For starters, it boasts strong returns on capital and equity. In its last financial year that ended in March, it achieved a very healthy 17% net profit margin.
Second, the company has credit information on over 1.4bn consumers and 191m businesses around the globe. This is almost impossible to replicate, giving it a powerful and durable competitive advantage.
Third, these high-quality datasets can be used for new analytics tools powered by artificial intelligence.
The one issue I’d highlight here though is valuation, with the stock trading at around 29 times forward earnings. That’s much higher than the FTSE 100 average, which could mean any disappointing results might send the price lower.
However, I don’t think the valuation is outrageous for a world-class data firm. I can see the stock outperforming the UK market over the next decade and plan to add it to my SIPP.
