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1 heavyweight FTSE 100 share I’d buy as London retakes its crown

British flag, Big Ben, Houses of Parliament and British flag composition
Image source: Getty Images

After surging to record highs in May, FTSE 100 shares have since come off the boil a bit. But not as much as those in France, where the CAC All-Share index has fallen by around 7.4% in one month.

The index has been driven lower by uncertainty about the outcome of the nation’s looming parliamentary elections. And it means that London retook its title as Europe’s largest stock market from Paris on 17 June.

That said, a quick rebound in giant luxury stocks like Hermes International and LVMH across the Channel could quickly reverse that. It’s neck and neck.

Still, it’s encouraging to see UK blue-chip stocks getting some love recently. Valuations are attractive and dividends are high, which has been attracting overseas investors.

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Here is one Footsie stock that I’d buy today, despite its enormous size.

Still growing strongly

I’m talking about AstraZeneca (LSE: AZN), which is London’s largest firm with a market cap of £192bn.

The first thing I like here is that demand for AstraZeneca’s products, which includes treatments for cardiovascular diseases and various types of cancer, is generally stable across the economic cycle.

However, the pharmaceutical giant is doing much better than stable. In 2023, its revenue rose 6% year on year to $45,8bn, despite a huge decline from its Covid medicines (it has now withdrawn its Covid vaccine due to low demand).

Excluding these, total revenue actually jumped 15% and product sales increased 14%. And core earnings per share (EPS) advanced 15% to $7.26.

CEO Pascal Soriot said: “We expect another year of strong growth in 2024, driven by continued adoption of our medicines across geographies. Our differentiated and growing portfolio of approved medicines, global reach and rich R&D pipeline give us confidence that we will continue to deliver industry-leading growth.”

Looking ahead, the oncology market is sadly set to grow due to rising cases of cancer globally. But AstraZeneca is a world-leader here. Its blockbuster cancer drug, Tagrisso, has proven to reduce the risk of the disease spreading by an incredible 84% in patients with a type of Stage 3 lung cancer.

Risks to consider

After rising 16% year to date, the stock isn’t exactly cheap at 19.2 times forward earnings. That’s far less than Footsie peer GSK, which is trading at just 10.1 times forecast earnings for 2024.

However, I think this disparity simply reflects the much faster growth of AstraZeneca, its far deeper pipeline of drugs, and GSK’s ongoing litigation issues. A judge in the US has just allowed over 70,000 lawsuits alleging GSK’s discontinued heartburn drug, Zantac, caused cancer.

Of course, that doesn’t mean AstraZeneca couldn’t one day face similar problems. Litigation is a key risk in the pharma industry, as is adverse regulation, patent expirations, and clinical trial failures.

I’d still invest today

Longer term though, I’m very bullish on the sector and AstraZeneca in particular.

This is due to the powerful trend of a rapidly ageing global population, especially in China where the company has a growing presence. This could boost demand for its medicines for decades.

And with the firm aiming to grow revenue by 75% to $80bn by 2030, I think the shares will continue to handily outperform the FTSE 100. That’s why I treated myself to a few not long back.

The post 1 heavyweight FTSE 100 share I’d buy as London retakes its crown appeared first on The Motley Fool UK.

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Ben McPoland has positions in AstraZeneca Plc. The Motley Fool UK has recommended AstraZeneca Plc and GSK. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2024