Considering the improving outlook for the economy, I’ve been searching for FTSE 100 shares to buy right now. I believe a couple of companies have recently fallen on hard times but could generate outstanding returns for investors in the long run.
FTSE 100 bargain
The first company I’d buy for my portfolio of blue-chip stocks today is AstraZeneca (LSE: AZN). Since the middle of last year, shares in this pharmaceutical giant have declined in value by around 23%, excluding dividends.
I think this is a great opportunity to take advantage. After these declines, shares in the FTSE 100 business are changing hands at just 15 times 2020 projected earnings. That’s compared to the pharmaceutical sector average of around 18.
Having said that, these are only projections at this stage. There’s no guarantee the company will manage to hit the earnings forecasts analysts have currently laid out.
Indeed, analysts expect the group’s net income to increase to 200% over the next two years. While Astra will benefit from the booming demand for its coronavirus jab, this projected growth seems a tad optimistic. There’s also the risk that income could decline as the pandemic recedes and the need for the jab falls.
Still, there’s more to this FTSE 100 group that its coronavirus vaccine. It is a leader in the development and production of oncology treatments, and several of these are expected to yield significant profits for the organisation in the next few years.
This potential, coupled with the group’s discounted valuation, leads me to conclude this is one of the best shares to buy now. That’s why I’d buy the stock for my portfolio today.
Best shares to buy right now
But while other investors have been selling, I think this could be an excellent opportunity to snap up shares in this exchange operator at a discounted valuation. Right now, the stock is changing hands at a forward price-to-earnings (P/E) multiple of 27, compared to its long-term average of around 30.
The London Stock Exchange has a huge competitive advantage over most financial services firms in the UK. It operates the at plumb end of the stock market. That means market participants almost have no choice but to use its services.
This has led to growing profitability over the past five years. Net income at the FTSE 100 firm has expanded at a compound annual rate of 5% over the period. As we advance, I think the group should be able to build on its existing position in the financial markets to drive growth.
That said, it does face some significant risks. These include antitrust investigations, increased regulations, and rising costs. And just because the London Stock Exchange is the largest market operator today doesn’t mean it will continue to be so indefinitely. Competitors are emerging, and these could eat away at its market share over the long term.
Looking past these risks, I’d buy this stock for my portfolio as I believe it’s one of the best shares to buy right now in the FTSE 100.
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Rupert Hargreaves has no position in any of the shares mentioned. 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.