Are Vectura Group PLC, AstraZeneca plc And Lookers PLC ‘Screaming Buys’?

Should you add these 3 stocks to your portfolio? Vectura Group PLC (LON: VEC), AstraZeneca plc (LON: AZN) and Lookers PLC (LON: LOOK)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in pharmaceutical development company Vectura (LSE: VEC) have soared by around 10% today after it announced two pieces of very positive news flow. The first is that the FDA has approved the dual combination Utibron Neohaler and standalone monotherapy Seebri Neohaler products for treatment of chronic obstructive pulmonary disease (COPD). This has triggered a milestone payment of $22.5m from Novartis to Vectura as part of the deal agreed between the two companies regarding the treatment.

Hugely positive

Additionally, Vectura has also announced a €750k milestone payment from Novartis’s subsidiary Sandoz, relating to a development milestone for VR632, which is a generic, combined therapy for asthma/COPD.

Clearly, today’s news is hugely positive for Vectura, but despite its share price rise it still seems to offer excellent value for money. Certainly, its forward price to earnings (P/E) ratio of 95 may put a number of investors off, but with its bottom line forecast to rise by 141% next year, it puts Vectura on a price to earnings growth (PEG) ratio of only 0.3. This indicates that its shares appear to be well-worth buying for the long term.

Of course, the health care space offers other excellent opportunities. AstraZeneca (LSE: AZN) has endured a number of challenges in recent years, but now appears to have the right strategy with which to return to bottom line growth over the medium term.

Prudent buys

It has focused on engaging in M&A activity, with its strong balance sheet and excellent cash flow providing a great deal of opportunity in this space. Furthermore, the assets it has purchased seem to be very prudent buys, with its focus on treatments for global illnesses such as diabetes which are set to rapidly grow in prevalence in the coming years likely to offer a clear pathway to long term growth.

With AstraZeneca trading on a P/E ratio of just 15.3, it appears to offer excellent value for money. Certainly, its investors may need to be patient because profit growth may not return in the short run but, for investors taking a longer term view, now seems to be the perfect time to buy AstraZeneca — especially since its share price now appears to be exclusive of a bid premium.

Continued growth

Meanwhile, good news was also released today by car sales company Lookers (LSE: LOOK). Trading in its most recent quarter was in-line with expectations and it achieved record monthly performance in September. Crucially, integration of the 30 dealerships acquired through the purchase of Benfield Motor Group is progressing well, with them making a major contribution to the company’s financial performance.

Looking ahead, Lookers is forecast to increase its bottom line by 7% in the current year and by a further 10% next year. Despite this upbeat growth rate, its shares trade on a PEG ratio of only 1.1 and this indicates that they could be due for continued capital growth after posting a rise of 34% year-to-date. As such, now appears to be a good moment to buy a slice of Lookers.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of AstraZeneca. The Motley Fool UK has recommended AstraZeneca. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Fools wouldn’t touch these 5 FTSE 350 flops with a bargepole – how come I own 3 of them?

Harvey Jones took a chance on three struggling FTSE 350 stocks in the hope that they'd stage a dramatic recovery.…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

How I’m trying to make a million from passive income

Invest as much as possible, regularly, and use the passive income to plough back into more shares. Here's how millionaires…

Read more »

Investing Articles

I’d buy 30,434 shares of this UK dividend stock to target £175 a month in passive income

A top insider has spent over £1m buying this 9%-yielding passive income share over the last year. Roland Head explains…

Read more »

Growth Shares

Should I buy Rolls-Royce shares for 2025?

Edward Sheldon’s missed out on the huge gains that Rolls-Royce shares have generated this year. But should he buy the…

Read more »

Investing Articles

30,000 shares in this FTSE 250 REIT could earn me £559 a month in passive income

Real estate investment trusts can be great passive income investments. And Stephen Wright likes one from the FTSE 250 with…

Read more »

Investing Articles

Down 24% and yielding 9.18! Is L&G the best passive income stock on the FTSE?

Harvey Jones is the first to admit that the Legal & General share price has had a poor year. But…

Read more »

Investing Articles

Warren Buffett just bought these 2 stocks!

Warren Buffett just invested $700m in these stocks! What’s the strategy behind them, and should investors think about following in…

Read more »

Investing Articles

£10 a day invested in UK stocks could create a second income of £40,000 a year!

Investing even a small amount of money regularly can generate a substantial second income stream in the long run. Zaven…

Read more »