Right now is the perfect time to get into healthcare stocks, with the industry growing rapidly, accelerated partly down to Covid-19. I believe AstraZeneca (LSE: AZN) is the perfect stock to invest in when it comes to pharmaceuticals and healthcare. Having been founded in 1999, it is fair to say the company is not going anywhere and has forged itself into history with its research and findings.
Here are three reasons for me to invest in AstraZeneca:
Its growth is organic
The company’s growth is unexpected after 20 years of not meeting Wall Street’s expectations. The company’s oncology and cardiovascular drug segments are doing extremely well. The cancer drug trio of Tagrisso, Imfinzi, and Lynparza is consistently growing year-over-year sales by a double-digit percentage, with next-generation type 2 diabetes drug Farxiga delivering 60% sales growth through the first half of 2021. None of these four blockbuster drugs show signs of slowing down anytime soon.
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It’s a healthcare stock
To start with, it is a healthcare stock and healthcare companies are highly defensive. We don’t choose when we get ill and what type of illness we may develop. That essentially allows pharmaceutical companies constant work and income. Typically, demands for drugs, devices and healthcare services remains the same regardless of the state of the economy and thus it is a safe bet against a drop in the state of the economy.
To boost this, AstraZeneca offers a 2.56% dividend, which in the current market is very good in my opinion. This is an added bonus to a company whose stock price is up 118.31% in the last five years (as of 6th November). The 2.56% dividend yield is well above the S&P 500 average of 1.3%.
The smart acquisition of Alexion Pharmaceuticals
And thirdly, AstraZeneca made one of the smartest acquisitions in the pharmaceutical space. In July, it closed a cash-and-stock deal to purchase ultra-rare-disease drugmaker Alexion Pharmaceuticals for $39 billion. The biggest buyout in the company’s history lands it a company that faces little competition in the indications it serves.
Even more importantly, Alexion developed a second-generation therapy for its blockbuster drug Soliris. This treatment, known as Ultomiris, is administered less frequently than Soliris, and should have an opportunity to siphon sales from Soliris over time. In other words, Alexion secured its cash flow from potential generic or biosimilar competitors for probably another decade. Alexion also has many other drugs in its portfolio that treat rare conditions and this will be a great asset for AstraZeneca to have.
With sustainable low double-digit sales growth, I am likely to add to my position in AstraZeneca in the next month.
