Investing is all about looking to the future, investing not in what was successful in the past, but what will be successful in years to come.
Thats why Ive repeatedly advocated the merits of buying into companies in the biotechnology and technology sectors. But if you could invest in just one firm, which would it be: a pharmaceuticals giant with expertise in a range of biological drugs, or a tech business thats perhaps the leading consumer stock in the world?
AstraZeneca
AstraZeneca (LSE:AZN) is one of Britains leading pharmaceuticals companies. And its now basically a biotech business.
A few years ago there was much talk about the patent cliff, as a series of patents on blockbuster drugs expired, leading to a sharp fall in AZs earnings. But this wasnt the end of the pharmaceuticals industry far from it. As many chemical drugs have faced generic competition, so a whole new generation of antibody-based treatments used to treat ailments such as cancer and arthritis hasemerged. And several of these are real money-spinners.
Cancer used to be an incurable disease, but thats no longer the case. And thats down to a succession of advances in the medical and bio-sciences. And our understanding of the complexities of proteins has been at the core of this.
Whats more, the global demand for medicines is growing, as emerging market healthcare spend climbs. Thats why Im a strong advocate of the investing merits of AstraZeneca. However, the share price has already risen a lot, anda P/E ratio of 28, with a dividend yield of 3.62% is on the pricey side.
Apple
Theres no doubt about it, the rise of Apple (NASDAQ:AAPL) from a tech no-hoper to the worlds biggest company has been the investing story of the past 15years. But is that story now over?
There are differing views on this. Billionaire investor Carl Icahn recently sold his holding. Yet equities guru Warren Buffett bought in. Whos right?
Well, I have to admit, Apples recent results have disappointed. Sales have fallen around the world and, most worryingly, theyve slumped in China, the market that chief executive Tim Cook placed so much emphasis on.
But, lets geta little perspective on this. Im a firm believer in the power of the trend. The ranks of the middle classes in emerging markets are growing at an astonishing pace. This will lead to a massive global consumer boom. And the iPhone remains the leading object of desire in the world.
Even if sales in China have fallen, well see growth in countries such as India and Malaysia. In much the same way asthere was no demise of the pharmaceuticals industry after the patent cliff, this isnt the end of Apples boom. But, perhaps, well see this company turn from being a high-growth punt to being a high-yielding blue chip to add your portfolio. And a P/E ratio of just 11, with a dividend yield of 2%, still looks good value.
Both companies are worthy investments but, in my view, and becauseof its cheaper rating,Apple just edges it.
Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. 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.
