1 FTSE 100 stock I’d buy today and it’s not Lloyds or Rolls-Royce


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Lloyds and Rolls-Royce are two of the most traded companies in the UK at the moment. Yet, despite all the attention, neither would be the first FTSE 100 stock I’d put money into today. 

Don’t get me wrong, I like these firms and own shares in both, but they each have issues. Lloyds may look cheap but it’s traded sideways for years. Rolls-Royce has had a good year but is still not profitable and is some way from paying a dividend. 

A better place for my money would be a growing company with no red flags, and for that, I’m looking at pharmaceutical firm AstraZeneca (LSE: AZN). I think it might be the best stock to buy on the Footsie right now. 

Unlike those other two, AstraZeneca is a company squarely on the rise. Last year’s revenue was up 25% and earnings-per-share (EPS) was up 33%. Analysts expect this to continue, with some predicting 20% EPS growth for the next five years.  

Source: AstraZeneca

This growth can be put down to CEO Pascal Soriot. He took the reins in 2012 with a pledge to focus on R&D and innovation. He’s clearly doing something right as the shares are up 282% and AstraZeneca is now the biggest firm on the entire FTSE 100. 

Innovation

The focus on innovation looks a very good move in hindsight. A pharma firm lives and dies on its drugs pipeline, and in that regard, it’s in a great spot with plenty of big money-spinners. 

Here are the full-year results of five medicines from 2022:

  • Lung cancer medicine Tagrisson saw 15% growth to $5.4bn
  • Cancer medicine Imfinzi enjoyed 21% growth to $2.7bn
  • Diabetes drug Farxiga saw 56% growth to $4.4bn
  • Asthma drug Symbicort recorded a 2% decrease to $2.5bn
  • Rare disease drug Ultomiris reported 42% growth to $2bn

This isn’t the end of it either. Another 178 drugs are in development, which shows there’s no slowdown in the firm’s ability to create revenue-generating medicines. I’d have to say the future looks bright here.

The icing on the cake is the valuation. It’s true that AstraZeneca has looked expensive in recent years, touching a price-to-earnings ratio of nearly 100 only in the last year. But the backwards facing P/E is now just 34 and the forward P/E is only 18. That strikes me as very reasonable for a business that’s growing this much. 

US rival Eli Lilly looks much more expensive with a forward P/E of 52. And looking at UK competitors, GSK does have a lower P/E ratio of 9 but with prospects that aren’t nearly as good.

A buy?

In terms of risks, the firm does carry debt. The debt-to-equity of about 85% is high and may mean make it harder to fund future research, especially with interest rates being as high as they are.

Still, I think I’m looking at a great buy. Sure, the gaze of the market may be centred on firms like Lloyds and Rolls-Royce, but I think AstraZeneca is the best stock of the three. I’d buy in today if I had the spare cash.



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