AstraZeneca
One of the main reasons to invest in AstraZeneca (LSE: AZN) (NYSE: AZN.US) is its financial strength. That’s because it is allowing the company to pursue a strategy of acquisitions in order to overcome its patent cliff, with AstraZeneca’s bottom line set to return to growth within two years.
Of course, there is also the potential for AstraZeneca to be taken over. While rumours on this subject have lessened somewhat in recent months since US regulators closed the tax loophole that made being domiciled abroad more lucrative for US companies, AstraZeneca’s improving pipeline and sound finances mean that it remains a very appealing takeover target.
And, with its shares trading on a price to earnings (P/E) ratio of 16.3, it seems to offer good value for money, too. Furthermore, with the pharmaceutical sector being viewed as relatively defensive, AstraZeneca could be a somewhat less volatile stock to own in what may prove to be an uncertain period for the FTSE 100.
Weir
Shares in Weir (LSE: WEIR) are up by 4% today despite the engineering company reporting a 9% fall in revenue in the first quarter of the year. The reason for the fall in revenue is weaker gas and oil prices, which have cut capital expenditure in the sector. And, while Weir expects a further deterioration in order input throughout the rest of the year, it is in the process of cutting costs, which looks set to return its bottom line to growth next year.
The key reason, though, why its shares have moved higher today is that the downturn in its oil and gas markets has not hit its mineral business. In fact, order input in Weir’s mineral division rose by 5% in the first quarter of the year, which is encouraging news for investors in the company. Still, with Weir’s shares trading on a P/E ratio of 16.7, they appear to be fully valued given the challenging outlook over the medium term.
Greggs
Shares in Greggs (LSE: GRG) have surged by around 5% today as the high street bakery has announced a special dividend of £20m after reviewing its capital structure. In addition, Greggs has made an encouraging start to the year and now expects results for the first half of the year to be ahead of previous guidance, owing to an excellent first quarter of the year.
In fact, Greggs posted like-for-like sales growth of 5.9% in the first part of the year, which shows that its strategy of closing unprofitable stores is having a positive impact on its top line. It is also causing investor sentiment in the company to improve, with shares in Greggs rising by an incredible 116% in the last year.
However, Greggs may yet run out of steam, since although its bottom line is set to rise by 14% in the current year, its P/E ratio of 22.1 indicates that its future potential is already adequately priced in.