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Expensive but exceptional! 2 FTSE 100 stocks I’d buy following latest news

AstraZeneca (LSE: AZN) is now in great shape to put the profits turbulence of the past decade well and truly behind it. How so? Well, there’s been huge efforts undertaken to supercharge its product pipeline and put the problems of patent expirations of critical revenues-driving drugs to bed.

Less than a decade ago, the FTSE 100 pharma giant appeared in dire straits as its lab teams lagged those of the competition by a county mile. Under chief executive Pascal Soriot, however, and the strides he has made to modernise AstraZeneca’s R&D culture, its success in getting new products from testing stage to pharmacy shelf has improved considerably.

This was apparent in first-quarter results released last week in which the sales rate of new medicines was again very impressive, up 83% from the same 2018 period. What’s more, promising news concerning its drugs pipeline in the quarter, like the regulatory approval of metastatic breast cancer treatment Lynparza and diabetes-battler Farxiga in the European Union, underlines my belief there’ll be much more to come.

City analysts believe so too, and are predicting that a 1% predicted earnings improvement at AstraZeneca will jump to 22% next year. A forward P/E ratio of 21.5 times may make the business expensive on paper, but I reckon the rate at which its new medicines are hitting the market and are being snapped up by consumers all over the globe, still makes the firm a white-hot buy despite this premium.

It’s not just a sales story

Associated British Foods (LSE: ABF) is a blue-chip I’ve long lauded over the exceptional growth potential of its critical Primark budget fashion business.

I was delighted, then, to see operating profits here continued to blast higher in the 24 weeks to March 2, up 25% year-on-year to £426m. Conditions remain tough for retailers but sales are still growing at Primark. Thak’s thanks to market share grabs driven by great product lines and the attractiveness of its prices in tough times for consumers in many parts of Europe and not just the UK.

Now ABF is exploiting this to the max by aggressively expanding its retail space, which rose by 800,000 sq ft year-on-year to 15.1m sq ft as of the beginning of March. A surging top line, however, is only part of the story. The Footsie company is also bolstering margins through a combination of reduced discounting, better stock management, and improved buying. Such endeavours helped operating margin in the half-year period gallop to 11.7% from 9.8% in the previous year.

Forecasters from the Square Mile believe Primark has much more to give as well. It’s why they reckon earnings growth at ABF will jump from 1% in the fiscal year to September 2019 to 11% the following year. So I say forget about the firm’s high prospective P/E multiple of 18.9 times and buy in as the retailer’s quest for speedy international growth could deliver some stunning shareholder returns in the years ahead.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods and AstraZeneca. 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.