Growth stocks are not a core part of my portfolio. There’s a lot of volatility here. And there is naturally no guarantee that growth stocks will move in the right direction. In fact, many growth stocks fail.
But today, I’m looking at AstraZeneca (LSE:AZN). It’s not what people would conventionally refer to as a growth stock. After all, it’s been around for decades, it’s the biggest company on the FTSE 100 and it offers a dividend, albeit a small one. In fact, its dividend yield is lower than all but one of the biggest US pharma/biotech firms.
However, I contend that AstraZeneca is among the best stocks poised for growth. And that’s why I’m looking to buy this stock for my portfolio.
Recent performance
AstraZeneca’s breast cancer treatment candidate Enhertu, or trastuzumab deruxtecan, was approved for use in the US last week, and that piece of good news came on the back of a positive earnings update a few days before.
The Anglo-Swedish biotech had boosted its earnings projections for the year on an increase in prescriptions of its Evusheld injection that protects against Covid-19. AstraZeneca said that total revenues were now expected to increase by “a low twenties percentage“. That’s up from previous estimates in the “high teens“.
Earnings also beat analysts expectations. Core earnings came in at $1.72 per share for the three months to 30 June, versus an expected profit of $1.56 per share. Revenue hit $10.8bn during the period.
Product sales were up 41% at $21.6bn for the six months to 30 June with oncology coming in as a big growth area, up 22%.
The growth picture
AstraZeneca has one of the best pipelines in the industry, with 184 projects in development right now. However, it is worth noting that the pipeline is dominated by label expansion developments for already approved drugs, as opposed to entirely new opportunities. But by comparison, Pfizer only has 104. It’s still a very impressive pipeline.
The purchase of Alexion for $39bn also add to the company’s growth potential. The acquisition marks AstraZeneca’s entry into medicines for rare diseases and opens up a new revenue stream for the pharma giant.
I also like the geographical diversification of AstraZeneca’s earnings. Total revenue in H1 was split nicely across continents with 38% coming from the US, 28% from emerging markets, 20% from Europe, and 14% from the rest of the world.
I’m buying
AstraZeneca stock is up a whopping 30% over the past 12 months and 136% over the past five years. It’s a big winner in the industry and I’m backing it to continue growing in the coming years. That’s why I’d add this stock to my portfolio today.