AstraZeneca (LSE: AZN) with a market cap of £165bn is the second largest FTSE 100 stock after Shell, and constitutes 8.2% of the total Footsie market cap of £1,996bn. It is the world’s eight largest pharmaceutical company.

AstraZeneca was founded in 1999 through the merger of the Swedish company Astra AG and Britain’s Zeneca Group. Zeneca itself was formed in 1993 by the spinning off by ICI of its pharmaceutical operations.

For the 29 years since 1993, the company has been growing consistently. It has far outperformed the FTSE 100 index. Its share price has increased by an annual average of 13.88%, against an annual average increase for the Footsie of 4.74%.

The UK inflation rate for this period was 2.05% per annum. Excluding dividends, £1,000 invested in Zeneca in 1993 would have grown to £26,840 today while £1,000 invested in a FTSE 100 tracker fund would have only grown to about 9% of this, to £2,375.

AstraZeneca is currently paying an annual dividend of 2.0%. It is the only a ‘buy and hold forever’ stock in my portfolio. For me, it is in a class of its own as a large-cap FTSE 100 stock, many of which tend to be sluggish performers.

My decision to buy the stock was influenced by the fact that in the last 15 years, 2016 was its only down year.

AstraZeneca is a developer, manufacturer and marketer of a wide range of drugs and pharmaceutical products for oncology, cardiovascular, gastrointestinal, infection, neuroscience, respiratory and inflammatory health problems. It was one of the leaders in the race to develop a vaccine for the Covid-19 pandemic.

The world’s major pharmaceutical companies spend many years and vast sums of money in the search for new ‘breakthrough’ drugs — those that can generate £1bn or more in annual sales.

From the time a new drug receives regulatory approval, the clock is ticking on its patent exclusivity. Once this expires, typically in a decade or two, revenues for the original drug fall.  For the last 10 years the leading companies have been spending about a quarter of their revenues on new drug development.

For investors like me, it is important that pharmaceutical companies have drugs in their pipelines with breakthrough potential, together with adequate funds to finance their development and trials. It is a highly competitive and inherently risky business.  

The future

Before the Covid-19 pandemic put the global pharmaceutical industry in the spotlight, there were already major challenges facing it. Worldwide, the number of people aged 65 or more is projected to double — to over 1.5 billion — by 2050.

In addition, the growing middle class with increasingly sedentary lifestyles is leading to greater demands on health services. Chronic non-contagious diseases, such as cardiovascular disease and cancer, are expected to become increasingly prevalent and will demand innovative pharmaceutical solutions.

I believe AstraZeneca is well placed to thrive under this scenario and sustain its outstanding historical growth for many years to come. It has several new breakthrough drugs in its pipeline. For oncology, its drug Enhertu has been granted five separate breakthrough therapy designations by US regulators.

The post 1 FTSE 100 stock that should continue to outperform long term appeared first on The Motley Fool UK.

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Ian Benfield owns shares in AstraZeneca. The Motley Fool UK has no position in any of the shares mentioned. 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.

My portfolio

On an equal invested value basis, the portfolio has grown by 69.6% over the past three years (+19.2% per annum). While past performance is no guarantee of future performance, medium to long term I expect the overall portfolio to outperform the FTSE 100 and FTSE 250 indices.

One or two of the stocks may disappoint. Hence, I will actively manage the portfolio and substitute any stocks for which the prospects deteriorate.

AstraZeneca

A British-Swedish multinational pharmaceutical and biotechnology company. It was at the forefront of the rush to develop and distribute a vaccine for Covid-19. Its innovative medicines are used by millions of patients worldwide.

Beazley

A British parent company of worldwide insurance businesses. It underwrites a diverse book of insurance and reinsurance for clients and is a market leader in many of its chosen lines.

Bunzl

A British multinational distribution and outsourcing company. Over 50% of its business is in the food service and food retail sectors.

Capricorn Energy  (previously Cairn Energy)

A British oil and gas exploration and development company. Despite Britain’s net zero objectives, as green billionaire Elon Musk says, “civilization would crumble” if the world stops drilling for oil and gas.

Glencore

An Anglo-Swiss company. One of the world’s largest globally diversified natural resource businesses, being both a mining company and the world’s largest commodities trading firm.

Hunting

A British-based supplier to the oil and gas industry.

Indivior  

A global pharmaceutical company specialising in developing medicines to treat substance use disorders and serious mental illnesses.

Mediclinic International

An international private hospital group with hospitals in South Africa, Namibia, Switzerland and the United Arab Emirates.

Serco

A British contractor for the supply of Government services, primarily in the health, transport, justice, immigration, space, and defense sectors. 55% of the company’s revenue is generated outside the UK.

SSE

Formerly Southern and Scottish Energy, SSE is a multinational energy company that operates UK power stations and offshore wind farms and has a hydroelectric plant in Scotland.

The post My 10-share stock market portfolio for future growth appeared first on The Motley Fool UK.

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Ian Benfield has positions in AstraZeneca, Beazley, Bunzl, Capricorn Energy, Glencore, Hunting, Indivior, Mediclinic, Serco and SSE. The Motley Fool UK has recommended Bunzl. 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.

Copper production in 2021 was 721,000 metric tons (MT), about 3% of the world total. The forecast for 2022 is lower, 640-660,000 MT, due to a fractured concentrate pipeline at its Les Pelambres mine and a water shortage resulting from a drought in Chile.

The first half of 2022 was challenging for Antofagasta. Also, the copper price was volatile due to world macro developments.

Nevertheless, while the short-term outlook remains uncertain, because of global economics (inflation) and geopolitics, I believe the medium- to long-term outlook for copper, and therefore Antofagasta, is very promising. 

As countries make the transition to low-carbon economies, copper is a critical metal for renewable clean power generation and electric vehicles (EV)s. On 15 November 2021, President Biden signed a massive infrastructure bill of $226bn for projects requiring large amounts of copper.

The dominance of internal combustion engine vehicles on our roads is fading fast. In 2021 global electric vehicle sales totalled 6.6 million, 9% of the global market, double 2020’s volume. Great news regarding decarbonisation, but there is a looming copper shortage due to the ever-increasing EV demand and the concomitant green energy transition.

Future demand

The 2050 net zero climate objective will not be achieved without a major increase in copper production. An EV requires 2.5 times more copper than a conventional vehicle. However, insufficient new mines and mine expansions are being developed to meet this and the copper demand for new green energy power stations and their transmission lines.

A chronic gap between worldwide copper supply and demand is projected, beginning in 2025. It is forecast to be as much 1.5 million MT by 2035 even if annual copper production nearly doubles by then to 47 million MT, from 24.5 million MT in 2022. Recycling of scrapped EVs will be insufficient to fill the gap. Thus, copper could become a major national energy security concern.

Medium to long term the price of copper, while volatile, can only go one way in my opinion: up. Consequently, it makes sense for me to hold copper stocks, such as Antofagasta, in a balanced share portfolio.

At the time of writing, its share price was £11.35. Antofagasta had a market cap of £10.72bn and a price-to-earnings ratio of 14.6:1 (TTM). For 2021 gross revenue was US$7.47bn with an EBITA (earnings before interest, taxes, depreciation and amortization) of US$4.84bn. Profit before tax was US$3.48bn.

The price of copper peaked, at US5.01c/lb in March 2022, as did the Antofagasta share price at £17.99. By July they had fallen, to US3.19c/lb (-26.7%) and £9.71 (-36.9%) respectively. Since then, they have recovered to US3.67c/lb (+15.0%) and £11.35 (+16.9%).

I believe now is a good time for me to buy shares in Antofagasta.

The post Is now the time to buy Antofagasta shares? appeared first on The Motley Fool UK.

More reading

• £5,000 invested in Rolls-Royce shares on 17 April is now worth…
• Up 30% in April but still at a 10-year low! Is this the best stock to buy in May?
• 3 REITs to consider as buy-to-let gets tougher in 2026!
• Lost money on Diageo shares? Consider buying this £2.19 FTSE stock to try and make it up
• How much is needed in an ISA to target a £2,764 monthly passive income?

Ian Benfield owns shares in Antofagasta. The Motley Fool UK has no position in any of the shares mentioned. 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.