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FTSE 100 Shares are sometimes suspected by investors in favor of US stocks listed on S&P 500 and Nasdaq Composite. After all, UK quoted companies account for about 4% of the total value of the global stock market – a smaller amount than American stocks at 58%.
However, in a year that will be defined by an ongoing battle to curb inflation and volatile trading action, defensive Footsie stocks could once again outperform, as they did last year.
One UK stock I will invest in this month AstraZeneca (LSE:AZN), which is the largest business in London’s blue-chip index as measured by market capitalisation. I already own shares in the healthcare giant, but this is why I bought more in April.
A pharmaceutical innovator
AstraZeneca became a household name during the pandemic, thanks to its effective Covid-19 vaccine. Titan biotek is an innovative company with deep expertise in developing medicines to solve various health challenges.
In the AstraZeneca stock price history chart, you can see the history of changes in the value of the currency HSBCThe fund, which tracks the FTSE 100 index over the past five years, has risen 128% against the Footsie’s 8% gain. That outperformance is incredible.
So can the company continue to grow at such a rapid pace? The numbers seem to suggest it is possible.
Full-year results for 2022 show strong progress across all key metrics. Revenue rose 25% to $44.4bn and core earnings per share expanded 33% to $6.66.
What’s more, the company has started more than 30 phase III trials this year, including potential blockbuster drugs for breast cancer and hypertension. A strong pipeline is essential to replace lost revenue from patent expiration. This is because the intellectual property protection that covers existing products usually only lasts for a maximum of 20 years.
Falling sales for AstraZeneca’s Covid treatment are worrying. However, I think our industry-leading R&D program should be enough to offset lost revenue as the world recovers from the pandemic.
Diversification
Another aspect I like about the company is the variety of revenue streams.
| Therapeutic Area | Percentage of Total Revenue FY22 |
|---|---|
| Oncology | 35% |
| Cardiovascular, Kidney and Metabolism | 21% |
| Rare Diseases | 16% |
| Respiratory and Immunology | 11% |
| Vaccines and Immune Therapy | 11% |
| Apart | 4% |
Businesses are also geographically diverse.
| territory | Percentage of Total Revenue FY22 |
|---|---|
| ACE | 40% |
| The market is developing | 26% |
| Europe | 20% |
| Rest of the World | 13% |
Diversification is an important quality to consider when it comes to business stability, and AstraZeneca does not disappoint in this regard. It has strength in various markets and sales in almost every corner of the globe.
In addition, management expects a return to full-year revenue growth in China this year. This is a promising development as this is an important market for the company.
Why should I buy more shares of AstraZeneca
There is always the risk that clinical trials may disappoint, which could cause volatility in AstraZeneca’s share price. However, I think the dips may be short. The company’s impressive pipeline means it doesn’t depend too much on potential drug breakthroughs.
With solid financials, a diverse business model, and economies of scale in a sector where size matters, AstraZeneca looks like a good investment to me.
I will improve my position this month.
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