The FTSE 100 may be charging higher right now, but that doesn’t mean there aren’t still good opportunities out there for long-term investors. With this in mind, here are two Footsie stocks I reckon deserve closer attention.
Healthcare blue-chip
Pharmaceutical giant AstraZeneca‘s (LSE: AZN) currently the largest listed UK firm, with a market-cap of £169.3bn. And that’s despite a share price drop of 12% over the past year (versus a 10% rise for the FTSE 100).
This immediately points to an issue that’s currently hanging over the pharma industry, which is the threat of US tariffs. We have no idea how this is going to play out, but it’s causing a lot of uncertainty, as are potential US drug pricing reforms.
In response, AstraZeneca’s pledged to invest $50bn in American manufacturing and operations by 2030. As well as a sign of financial strength, this signals a strong commitment to the world’s largest healthcare market.
However, the firm’s also committed to China, another massive market. In March, it announced plans to invest $2.5bn over five years in a new R&D hub in Beijing, focused on early-stage research, partnerships with Chinese biotechs, and an AI/data science laboratory.
My view here is that AstraZeneca’s a world-class company with strong long-term growth potential. And it’s shares can currently be picked up for 16 times this year’s forecast earnings, while also offering a 2.2% dividend yield.
I think the stock’s worth considering.
Tech trust
Next, we have Scottish Mortgage Investment Trust (LSE: SMT). This one’s performing better (up 14% year to date), yet the shares are still trading at an 8.5% discount to net asset value (NAV).
In other words, the estimated NAV’s around 1,190p, but the share price is trading 8.5% lower at 1,090%.
Critics might argue the discount simply reflects the probability that many of the trust’s holdings are overvalued. Granted, there’s always a chance the discount widens further, especially if the type of US tech shares it’s invested in fall out of favour. This is a risk.
However, looking at the portfolio, it’s not obvious to me that many top holdings are grossly overvalued. Take MercadoLibre, the Latin American e-commerce and fintech powerhouse, which is Scottish Mortgage’s second-largest position. It’s trading at 35 times next year’s forecast earnings, but is projected to grow the bottom line above 30% for the foreseeable future.
Meanwhile, Tesla, which is grossly overvalued, in my opinion, now makes up less than 1% of assets. Instead, the trust has built a larger position in rival Chinese EV giant BYD. This stock’s trading at 22 times earnings (not unreasonable for a fast-growing global electric vehicle (EV) leader).
Wise is another example. The disruptive fintech stock’s trading at 27 times forecast earnings. It’s a similar story for Amazon, Meta, and ASML. None of these tech stocks look outrageously valued to me, given their long-term growth prospects.
Our companies, the ones we’ve backed for years, have quietly delivered… Margins have widened. Free cash flow has accelerated. And long-standing themes like digital platforms, AI, electrification, and personalised medicine are delivering real, tangible results.
Tom Slater, lead manager, Scottish Mortgage.
Consequently, I think investors should consider adding shares of this growth-focused investment trust to their portfolios.
