Despite the stock market having a bit of a tantrum lately, FTSE 100 stocks have proven to be largely resilient. In fact, the index is actually up by just over 7% in the last 12 months. To me, this suggests that I can find some of the best shares to buy now in the index.
Companies in the FTSE 100 cover a diverse range of industries. But it’s biotech stocks that have caught my attention as a growth investor. Thanks to the pandemic emphasising the importance of this sector, the development of new medicines, vaccines, and treatments appears to be accelerating. And that looks to me like an opportunity.
Is AstraZeneca one of the best shares to buy now?
Shares of AstraZeneca (LSE:AZN) have had quite the stellar run lately. The UK’s largest biotech group has been firing on all cylinders. The latest earnings show a 51% jump in total revenue and a 20% rise in core earnings. So, seeing this FTSE 100 stock climb almost 30% in the last 12 months is hardly surprising.
There are a lot of factors at play. But it doesn’t take long to realise this growth is being driven by a steady stream of positive clinical trial results and regulatory approvals. And this may only be the beginning. Just last week, management reported its phase three breast cancer drug, Enhertu, showed a 49% increase in efficacy versus traditional chemotherapy.
A recent study by Fortune Business Insights forecast the breast cancer therapeutics market to grow by a compounded annual rate of 13.1% between now and 2027, reaching a total size of $55.3bn. Needless to say, that’s a big opportunity for the company. And with additional encouraging phase three trial results for its cardiovascular and Devic’s disease treatments, the future looks bright for investors.
Ignoring the acquisition of Alexion, earnings-per-share (EPS) for 2021 came in at an impressive $5.29 (£4.23). Compared to today’s stock price, that places the price-to-earnings ratio at just under 20. While that’s certainly not “cheap”, it’s far from unreasonable. And with such an impressive lineup of new drugs being submitted for regulatory approval, this seems like a fair price to pay for my portfolio. That’s why I think AstraZeneca could be one of the best shares I could buy now.
Another FTSE 100 biotech stock worth watching
Discovering new and improved treatments is exciting. However, for patients, especially in the US, the affordability of these treatments is often a problem. That’s where generic companies like Hikma Pharmaceuticals (LSE:HIK) come into play.
When a drug comes off patent, other companies can swoop in and create their own versions. Consequently, the market is flooded with alternatives that drive the prices down. For the most part, Hikma’s portfolio consists of chemically-based generics. But management has recently begun delving into the realm of biotech with its biosimilars in partnership with Celltrion.
Because creating biosimilars is difficult, it is a relatively uncontested arena. But that’s creating a massive opportunity. In fact, analyst forecasts predict a 40.2% annualised expansion of biosimilars market size until 2029. And with plenty of resources at its disposal, I believe this FTSE 100 stock could be one of the best shares to buy now for my portfolio.