The FTSE 100 is an index of the largest 100 companies listed on the London Stock Exchange. Comprising many financial and oil companies, it’s not known as a technology hub. But it holds a secret — there’s one stock in there that owns several large technology firms. It’s Scottish Mortgage Investment Trust (LSE: SMT).
FTSE 100 top pick
If I were to pick just one FTSE 100 stock, this would be it. I guess it’s a little bit of a cheat as it’s not just one company, but a type of fund set up as a company. Nonetheless, this investment trust includes some instantly recognisable tech names. Its top 10 largest positions include Tesla, Amazon, and Netflix.
The spectacular share price performance this year by some of these technology giants has propelled SMT to gains of over 50%, making it one of the five top-performing stocks in the FTSE 100.
One of the drivers has been the strong price performance of its largest holding, Tesla. The electric vehicle maker’s share price has increased by close to a massive 400% this year. Managed by Baillie Gifford, Scottish Mortgage Investment Trust was an early supporter of Tesla, first investing in its shares in 2013.
Just recently, it announced that it had reduced its stake in the Elon Musk-led company, to under 5% to comply with guidelines limiting stock weightings. Nonetheless, James Anderson, co-manager of the investment trust noted that he remains “very optimistic about the future of Tesla.”
After the recent share price correction in large-cap US technology stocks like Tesla, I think I’ll take another look at this FTSE 100-listed fund.
Just what the doctor ordered
The second-largest FTSE 100 stock is pharmaceuticals giant AstraZeneca (LSE: AZN). It’s a world-renowned organisation that has stood the test of time. It delivered strong revenue growth last year, supported by the launch of new medicines and further good progress on its drugs pipeline.
AstraZeneca started 2020 with a focus on enhanced innovation. When Covid-19 struck, this drive for innovation became pivotal. Its vaccine is among the leading candidates in the global race for a solution to the pandemic.
On Wednesday, it announced that trials of the vaccine have temporarily been put on hold following an adverse reaction in a volunteer. This is a routine action and shows the approvals process is being diligently followed and not rushed.
The pharma giant is one of the most formidable companies in the FTSE 100, in my opinion. And I’d say that it has done a decent job of managing the business through the crisis.
Both earnings growth and operating margins are in double-digits. In addition, the company has a dividend yield of nearly 3%. This in-the-news and resilient FTSE 100 giant looks well placed to earn a place in my buy-today-and-hold-forever investment account.
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Harshil Patel owns shares in Scottish Mortgage Investment Trust and Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, and Tesla and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. 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.