Build A Winning Portfolio With Aviva plc, BAE Systems plc And AstraZeneca plc

Aviva plc (LON: AV), BAE Systems plc (LON: BA) and AstraZeneca plc (LON: AZN) have all the traits of successful long-term investments.

| 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.

Trying to construct a portfolio that’s built for the long-term, which will help you weather the market’s tantrums, can seem like an impossible task at first.  However, it isn’t really that difficult to construct an all-weather portfolio. All you need to do is invest in a number of large companies trading at attractive valuations, with illustrious histories and stable outlooks.

Aviva (LSE: AV), BAE Systems (LSE: BA) and AstraZeneca (LSE: AZN) are three such companies.

Indeed, Aviva has been around for more than a hundred years and while the company has had some troubles recently it’s well-placed benefit from the UK’s ageing population. BAE is the UK’s premier defence contractor, and, due to the nature of the company’s business, it has few competitors.

Lastly, AstraZeneca has fallen on hard times recently — the company has struggled to replace old products coming off patent with newer treatments, to maintain sales growth. Nonetheless, despite the short-term headwinds facing the company, AstraZeneca has a vast portfolio of drugs under development and these treatments should help return the company to growth when they’re put into production. 

Time to take a look?

So, why should you consider Aviva, BAE and AstraZeneca for your portfolio? 

Well, as mentioned above all three of these companies have specific traits that will help them continue to report steady growth. What’s more, each of these companies has a leading position in the market it operates within — and that can be seen in each company’s equity returns during the past three years. 

For example, Aviva’s shares have returned 28% since the beginning of 2013 (excluding dividends). BAE’s shares have returned 40% (excluding dividends) and AstraZeneca’s have returned 33% (excluding dividends), both  since the beginning of 2013. Over the same period, the FTSE 100 fell 4%, and the FTSE 250 gained 21% (once again both are excluding dividends).

Aviva, BAE and AstraZeneca’s returns since the beginning of 2013 show that these companies can continue to rack up gains for investors even in sluggish markets.

Attractive valuations

The good news is that Aviva, BAE and AstraZeneca are all trading and attractive valuations right now.

Aviva is currently trading at a forward P/E of 9.5. Earnings per share are expected to grow 18% this year and based on this forecast the company is trading at a PEG ratio of 0.5. The shares support a dividend yield of 5.2%.

BAE is currently trading at a forward P/E of 12.8. The company’s earnings per share are expected to fall 3% this year, but pre-tax profit is expected to increase by nearly 50% to £1.5bn. BAE’s shares currently support a dividend yield of 4.2%.

Finally, there’s AstraZeneca, which is currently trading at a forward P/E of 14.3, making it the most expensive company in this article. Earnings per share are expected to fall by 8% this year, remain constant during 2017 and then begin to expand again during 2018. In other words, AstraZeneca is a long-term play suitable for the patient investor. The company shares support a dividend yield of 4.8%, and this payout looks safe for the time being — so investors will be paid to wait for Astra’s recovery.

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.

Rupert Hargreaves has no position in any shares mentioned. 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

Person holding magnifying glass over important document, reading the small print
Investing Articles

Just released: our top 3 small-cap stocks to consider buying in October [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a…

Read more »

Investing Articles

How I’d use an empty Stocks and Shares ISA to aim for a £1,000 monthly passive income

Here's how using a Stocks and Shares ISA really could help those of us who plan to invest for an…

Read more »

Investing Articles

This FTSE stock is up 20% and set for its best day ever! Time to buy?

This Fool takes a look at the half-year results from Burberry (LON:BRBY) to see if the struggling FTSE stock might…

Read more »

Investing Articles

This latest FTSE 100 dip could be an unmissable opportunity to pick up cut-price stocks

The FTSE 100 has pulled back with the government’s policy choices creating some negative sentiment. But this gives us a…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

As the WH Smith share price falls 4% on annual results, is it still worth considering?

WH Smith took a hit after this morning’s results left shareholders unimpressed. With the share price down 4%, Mark Hartley…

Read more »

Investing Articles

The Aviva share price just jumped 4.5% but still yields 7.02%! Time to buy?

A positive set of results has put fresh life into the Aviva share price. Harvey Jones says it offers bags…

Read more »

Investing Articles

Can a €500m buyback kickstart the Vodafone share price?

The Vodafone share price has been a loser for investors in recent years, and the dividend has been cut. We…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Growth Shares

3 mistakes I now avoid when choosing which growth stocks to buy

Jon Smith runs through some of the lessons he's learnt the hard way over the years about what to look…

Read more »