Will these FTSE stocks be among the biggest winners in the next rally? These five fools are confident!
AstraZeneca
What it does: AstraZeneca is a global biopharmaceutical company specializing in oncology, rare diseases, cardiovascular disease and other areas.
By Ben McPoland. AstraZeneca (LSE: AZN) is the largest company in the London Stock Exchange with a massive market cap of £191 billion. Whenever a new bull market gets going, I think the size of the pharmaceutical company could be a big part of it.
The company aims to increase its revenue to $80 billion by 2030. That would be a growth of 75 percent, which would be impressive for an already huge company. The company is also investing in “groundbreaking innovations that will shape the future of medicine and drive long-term growth“.
In this context, the company recently acquired biotechnology company Fusion Pharmaceuticals for up to $2.4 billion, as well as Gracell Biotechnologies, a pioneer in CAR-T cell therapies. The company also licensed an experimental pill from Chinese company Eccogene to enter the booming market for anti-obesity drugs.
Investors tend to react more optimistically to innovative growth stories like this in bull markets.
However, litigation is an ever-present risk in the industry, as are patent expirations, regulatory changes and inevitable clinical trial disappointments. Nevertheless, I am convinced that AstraZeneca has what it takes to continue to outperform the UK market.
Ben McPoland owns shares of AstraZeneca.
Burberry
What it does: Burberry is a British luxury brand with 229 retail stores around the world.
By Andrew Mackie I expect luxury retail to be one of the industry leaders with disproportionate gains in the next bull market, but right now the industry is being hit hard from many sides. Burberry (LSE:BRBY) was by far the worst performer, with its share price falling by over 70% in just 15 months.
The strategy of positioning itself as a modern British luxury brand has not worked. Although the company stated in its recent trading report that its strategy will not change, I fully expect the new CEO to quickly move away from the decisions made by his predecessor.
I was surprised by the extent of the share price drop. But a company that has been around as long as Burberry doesn’t always do everything right.
The customer base in the luxury segment continues to grow across generations and regions. I firmly believe that this market will continue to offer growth and stability in the future. I see the weakness in the share price as a wonderful opportunity. And the more it falls, the more shares I will buy.
Andrew Mackie owns shares in Burberry.
ITV
What it does: ITV is the owner of a television network and creator of TV content
By Alan Oscroft. Investors are turning away from big tech stocks, inflation is falling and central banks are expected to cut interest rates by the day.
To me, that means one thing. Investors should, with any luck, return to some of the stocks they have avoided in recent years. And I think ITV (LSE: ITV) could be one of them.
ITV’s share price has rallied this year, but is still well below where it was before the 2020 crash. And I just don’t think the valuation reflects the company’s potential.
Competition is probably the biggest risk, and I fear investor caution could weigh on the share price for a while. And with a price-to-earnings ratio of 14, the shares don’t look particularly cheap.
However, in the forecasts for 2026, this figure could fall below 10. And a sharp increase in cash flow should ensure further dividend growth (6% is planned by 2024).
Alan Oscroft does not hold a position at ITV.
Oxford Biomedica
What it does: A gene and cell therapy company specializing in the development of gene-based medicines.
By Mark David Hartley. Oxford Biomedica (LSE: OXB) is a world-class pioneer in cell and gene therapy, providing services to the pharmaceutical and biotechnology industries. The company specialises in the development of therapies and treatments for chronic and deadly viruses such as HIV.
Despite its groundbreaking developments, the company is not yet profitable. Its results for the 2023 financial year showed a loss of £1.63 per share, a net loss of £157 million and a 36% drop in revenue. Like many young technology companies, the company has spent a lot of money on research and development, which has led to losses. Whether this risk pays off remains to be seen.
Although the share price fell 22% in 12 months, it has recently recovered and rose 51% in the second quarter of this year.
Based on estimates of future cash flow, some analysts believe the company is undervalued by 70% and expect it to be profitable in 2026. Given the increasing demand for biomedical advances, I agree and believe it will take off in the next few years.
Mark Hartley owns shares in Oxford Biomedica
Scottish Mortgage Investment Fund
What it does: Scottish Mortgage is a Baillie Gifford fund that aims to “own the most extraordinary public and private growth companies in the world”.
(fool_chart_ticker =LSE:SMT)
By Charlie Keough. One stock that I believe will lead the next bull market is Scottish Mortgage Investment Fund (LSE:SMT).
It owns some of the world’s most exciting growth companies, such as Elon Musk’s SpaceX. These companies suffer from a high interest rate environment, so the trust has struggled in recent years.
But with cuts imminent, investor sentiment toward such companies is likely to become more optimistic. Falling interest rates are ideal for the disruptive companies Scottish Mortgage owns because they mean lower borrowing costs.
The risk of investing in the trust is that its share price can fluctuate because it has a large exposure to growth stocks. Additionally, around a quarter of its holdings are private companies. Establishing an accurate value for these companies can be difficult.
However, we saw what the stock can do when it rose over 100% in 2020. And it is 41.9% below its 2021 all-time high. Therefore, it is currently trading at a 9% discount to its net asset value.
Of course, past performance is no indicator of future returns, but I’m still optimistic because despite the 10.6% rise so far, Scottish Mortgage could continue to rise in the months and years ahead.
Charlie Keough owns shares in Scottish Mortgage.
The post 5 FTSE Stocks Fools Believe Will Lead the Next Bull Market appeared first on The Motley Fool UK.
Further reading
The Motley Fool UK has recommended AstraZeneca Plc, Burberry Group Plc and ITV. The views expressed on companies mentioned in this article are those of the author and may therefore 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
