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FTSE 100 Stocks are sometimes overlooked by investors in favor of publicly traded US stocks. S&P 500 and Nasdaq Composite. After all, UK-listed companies account for around 4% of the total value of the global stock market, a figure that is dwarfed by the US’s 58% share.
However, in a year likely to be defined by an ongoing battle to reduce inflation and patchy trading action, defensive Footsie stocks could once again outperform, just as they did last year.
One UK stock I will be investing in this month is AstraZeneca (LSE:AZN), which is the largest company in the London blue-chip index as measured by market capitalization. I already own shares in the healthcare giant, but here’s why I’m buying more in April.
A pharmaceutical innovator
AstraZeneca became a household name during the pandemic, due to its effective vaccine against covid-19. The biotech titan is a highly innovative company with deep experience developing medicines to address a variety of healthcare challenges.
As the graph below shows, the growth in AstraZeneca’s share price has significantly outpaced HSBCFTSE 100 index tracker bottom over the past five years, rising 128% vs. Footsie’s 8% gain. That’s remarkable top performance.
So can the company continue to grow at a breakneck pace? The numbers seem to suggest yes.
Full-year results for 2022 revealed strong progress on key metrics. Revenue grew 25% to $44.4 billion and basic earnings per share increased 33% to $6.66.
In addition, the firm is starting more than 30 Phase III trials this year, including potentially blockbuster drugs for breast cancer and hypertension. A strong pipeline is critical to replacing revenue lost from expiring patents. This is because the intellectual property protection that covers existing products generally only lasts a maximum of 20 years.
The withdrawal of sales of AstraZeneca’s Covid treatments is a concern. However, I think the company’s industry-leading research and development program should sufficiently make up for any lost revenue as the world moves on from the pandemic.
Diversification
Another aspect that I like about the company is the diversified nature of its revenue streams.
| Therapy Area | Fiscal Year 22 Total Revenue Percentage |
|---|---|
| Oncology | 35% |
| Cardiovascular, Renal and Metabolism | twenty-one% |
| Weird illness | sixteen% |
| Respiratory and Immunology | eleven% |
| Vaccines and Immune Therapies | eleven% |
| Other | 4% |
The business is also geographically diversified.
| Region | Fiscal Year 22 Total Revenue Percentage |
|---|---|
| US | 40% |
| Emerging markets | 26% |
| Europe | twenty% |
| Rest of the world | 13% |
Diversification is an important quality to consider when it comes to the stability of a business, and AstraZeneca does not disappoint in this regard. It has strength in a variety of markets and sales in almost every corner of the world.
In addition, management expects a return to full-year revenue growth in China this year. That’s a promising development considering this is a crucial market for the company.
Why am I buying more AstraZeneca shares?
There is always the risk that clinical trials will disappoint, which could spell volatility in AstraZeneca’s share price. However, I think that any dip is likely to be short-lived. The company’s impressive product portfolio means it isn’t overly reliant on the breakthrough potential of any particular drug.
With strong financials, a diverse business model, and economies of scale in an industry where size matters, AstraZeneca sounds like a great investment to me.
I will be adding to my position this month.
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