Don’t despair if you have left it late saving for your retirement portfolio and worry about living on the State Pension. There are some top growth stocks on the FTSE 100 that could help you play catch up.
The two I’m looking at here have risen strongly in recent years and, if it continues, could help you build up your wealth at a decent pace. Stocks like these could help you achieve financial independence, even starting from scratch at age 40.
Dechra Pharmaceuticals
Dechra Pharmaceuticals (LSE: DPA) is a blockbuster growth stock. Its share price has risen a whopping 265% in the past five years. The momentum continues, with growth of almost 27% in the past 12 months. I tipped the stock to beat the market last year, and that’s exactly what it did.
Today, the Dechra share price has fallen more than 6%, as supply problems in the first quarter of the year continue to drag on performance. The market knew that already, though. Management said “significant progress” has now been made, and those supply issues have largely been mitigated. However, markets remain a little sceptical.
That’s fine by me – I like to buy stocks for what they might do in the next five to 10 years, rather than the next five to 10 days. Dechra also reported a 7% rise in group net revenue and 13% growth in its European pharmaceuticals operation. A 2% drop in North America is a bit worrisome, but that is measured against a strong comparative year.
The £2.94bn FTSE 250-listed company needs to convince markets that all is well, because it trades at a pricey valuation of 31.8 times earnings, meaning any sign of slippage is punished. However, with earnings forecast to rise 6% in 2020 and 17% in 2021, I’m hoping there is more growth to come.
AstraZeneca
FTSE 100-listed pharmaceutical giant AstraZeneca (LSE:AZN) is on a different scale, with a massive market cap of £101bn. Companies of this size can struggle to grow their share price, but that hasn’t been a problem for AstraZeneca. CEO Pascal Soriot has overseen a 41% rise in the share price over the last 12 months, and a 70% rise over three years.
I’m impressed, because he faced a major challenge in replenishing the company’s dwindling drugs pipeline as key treatments went off-patent and generics piled in. Soriot has said the real benefits will be coming through from around 2024, but investors have been buying into his vision early.
The group could be in for a great decade, as its heavy R&D spend pays off and new treatments secure regulatory approval around the world.
Earnings growth forecasts look mighty impressive – 3% in 2019, 18% in 2020, and 24% in 2021. I haven’t seen many that positive in the FTSE 100 lately, as analysts fret about a global slowdown.
AstraZeneca is a little pricey, trading at 23.7 times earnings, while the forecast yield at just 2.8% is below the FTSE 100 average of around 4.34%. But those are quibbles. The future looks bright, and this looks like a great long-term buy and hold, providing both growth and income to boost your pension in retirement, no matter how old you are today.
