If you have £1,000 and want to invest the money a company that will stand the test of time, and provide you with a steady income along the way, I would recommend pharmaceutical giant AstraZeneca (LSE: AZN).
Astra isn’t a household name. Nevertheless, its products are used to improve the lives of millions of people all over the world every single day. It might not have the same kind of brand recognition as, say, Tesco or Apple, but there’s far more to Astra than the group’s branding.
Global pharmaceutical giant
What you’re really buying when you buy shares in Astra is the company’s portfolio of pharmaceuticals. As a shareholder, you will own a percentage of the business, giving you the right to a proportion of the firm’s income stream from its products already on sale, as well as the pipeline of treatments under development.
To put it another way, you get a steady income stream with the option for growth. And it’s this growth option that excites me. Astra is developing a stable of oncology products which, to put simply, are drugs designed to treat cancer.
The group has had some successes and failures in this market over the past 12-24 months. The most promising new treatment is Imfinzi, which has been approved for use in treating early-stage lung cancer. Studies show that it reduces the risk of death by almost one third compared to chemotherapy. Although the drug failed to repeat the positive results in another study, this time aimed at patients with stage five cancer, it’s still set to be a blockbuster for the company.
Other potentially game-changing treatments are also in the pipeline. Farxiga, for instance, has been shown to markedly reduce the chances of diabetic patients being hospitalised with heart failure. Studies with the drug also hint that it could be useful in reducing the risk of chronic kidney disease and heart failure for patients, not just diabetics. Astra is undertaking further studies to evaluate the real potential of this treatment.
More news in 2019
Astra should publish more news on its pipeline throughout 2019 as it continues to spend heavily on research and development — all part of CEO Pascal Soriot’s target to grow revenues to $45bn a year by 2023.
At this point, it remains to be seen if the company can hit this target. Still, I’m confident that its new treatments will help Astra grow revenues and profits substantially in the near-term. I’m also optimistic that as long as the business continues to invest in research and development, the production of new drugs will ensure its success for many decades to come. That’s why I think this business could be a great investment if you have just £1,000 to invest today.
On top of this growth potential, at the time of writing, shares in Astra also support a dividend yield of 3.9%, significantly above the rate of interest you’d receive from any high street savings account today.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended Apple. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool UK has recommended AstraZeneca and Tesco. 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.