Despite reaching impressive new all-time highs, the FTSE 100 remains filled with fantastic stocks to buy, some even at a discount. And according to the latest projections from The Economy Forecast Agency, the UK’s flagship index may pass the coveted 10,000-point threshold by the end of 2025.
That’s less than three short months away, with an expected 7.3% increase for passive index investors, and possibly even more for stock pickers.
So for those looking to maximise their returns this year, which stocks should investors be considering ahead of this next potential surge?
Finding the best stocks in October
While the stock market’s outperforming, the British economy’s in a bit of a tight spot. Inflation is proving stickier than expected, growth’s proving elusive, and the delayed government Autumn Budget is only adding to the uncertainty.
Therefore, when hunting for the best investment opportunities right now, I think it’s prudent for investors to search for the firms that:
- Have a strong balance sheet.
- Aren’t solely dependent on the UK for revenue.
- Enjoy continuous demand from customers regardless of economic conditions.
While these are certainly not the only important factors, they serve as a helpful filter to avoid a large number of traps. And luckily, the London Stock Exchange is home to many companies that pass these requirements. In fact, most of them are large-cap stocks in the FTSE 100, potentially explaining the bullish forecast from the experts.
A large-cap to consider?
Perhaps a perfect example of an international titan with strong financials and consistent demand is AstraZeneca (LSE:AZN).
As a near-£200bn enterprise, it certainly has size on its side. And being a global leading biopharma business specialising in cancer, cardiovascular, respiratory, and rare disease therapies, revenue has been pretty consistent even during the worst economic downturns. After all, even during a recession, people still need access to medicine.
The company’s been on a bit of a rampage of late. There are legitimate concerns of upcoming patent expirations, but the group’s on a bit of a winning streak when it comes to clinical trial results.
Numerous phase 3 drug candidates are reporting encouraging results, some capable of potentially turning into new blockbusters, replacing lost revenue from patent expirations and delivering even more. In fact, the excitement surrounding AstraZeneca’s Efzimfotase Alfa – a novel enzyme replacement therapy – is one of the reasons why Goldman Sachs recently raised its share price target to £150.13.
If this forecast proves accurate, that’s a potential 17.5% capital gain paired with a welcome 1.9% dividend yield.
Taking a step back
The outlook for AstraZeneca shares looks exceptionally promising. However, like all forecasts, investors need to add in a healthy dose of scepticism.
I’ve already mentioned the risks associated with upcoming patent expirations. However, there are also other threats to consider.
Regulatory pricing changes in the US – AstraZeneca’s core market – could adversely impact margins, particularly among its flagship oncology treatments. So even if revenue growth meets expectations, earnings could still disappoint.
It’s also important to highlight that AstraZeneca isn’t short on competitors, many of whom are developing their own treatments to protect and steal market share.
Nevertheless, with an impressive drug pipeline and proven track record, investors hunting for top-notch stocks may want to investigate further.
