Beyond my personal portfolio, I keep a list of what I believe could be the best stocks to buy now. It serves as a useful resource when looking for new investment opportunities. And it also lets me monitor the performance of businesses before committing any capital.
The list contains companies from the UK as well as from across the pond. And, sometimes, even “boring” stocks from the FTSE 100 make the cut.
With that said, here is one of my top picks from the UK’s leading index for 2022 and beyond.
A good buy today?
Despite the ongoing stock market turmoil and economic slowdown, one industry that seems to be largely unaffected is healthcare. After all, regardless of what the economy is doing, medical care often remains a top priority for individuals who need it.
That’s what’s brought Smith & Nephew (LSE:SN) onto my radar recently. As a quick reminder, the firm is a leading manufacturer of wound care products as well as orthopaedic devices. Demand for the former has remained relatively consistent throughout the group’s history. And with the global population on the rise, management has had little trouble finding new markets to penetrate.
However, the same cannot be said for its orthopaedic devices. In 2020, with hospitals fully focused on tackling the pandemic, the vast majority of elective surgeries were cancelled or postponed. Subsequently, both revenue and profits for this group took a double-digit hit. But skip ahead to today, and the story is very different.
At the end of 2021, revenue made a full recovery and even surpassed pre-pandemic levels, with earnings per share not far behind. And looking at the latest first-quarter results for 2022, this momentum has continued.
Domestic growth has returned to single digits. But management’s penetration into emerging markets like India has delivered a 14.3% growth rate so far this year.
Pairing this with newly approved software for its robotic CORI Surgical System makes me quite optimistic about the long-term potential for this FTSE 100 stock. And it’s why this business is on my ‘best stocks to buy’ list.
What are the risks?
Like every investment, there is no guarantee of returns. And this company, in particular, has to navigate what could be one of the most complex regulatory environments on the planet. All its products must be approved by each regulator of each country it wishes to operate in. Needless to say, this creates many additional expenses that may not be recovered even if approval is granted. After all, there are other companies competing for market share.
A more recent concern I have is a shift in management. Despite only joining in 2019, CEO Roland Diggelmann is stepping down. His successor is Dr Deepak Nath previously held leadership roles at Siemens Healthineers and Abbott Laboratories. He certainly seems qualified for the role, but only time will tell whether he can live up to expectations.
Personally, I’m cautiously optimistic. And with demand for the group’s products unlikely to disappear even in the tightest economic environments, I reckon Smith & Nephew is one of the best FTSE 100 stocks to buy now for my portfolio.