AZN - AstraZeneca: A Triple Shot Of Income Growth And Value
2024-04-27 07:30:00 ET
Summary
- Since I covered AstraZeneca last October, shares have narrowly outperformed the S&P 500 index.
- Thanks to impressive results throughout the business, the company's total revenue and core EPS jumped in the first quarter.
- AstraZeneca's interest coverage ratio remains robust, and the dividend remains amply covered with free cash flow.
- Shares of the big pharma player could be priced 8% below fair value.
- AstraZeneca could be able to deliver double-digit annualized total returns through 2026 in my view.
In investing, some of my favorite investments are what I like to call triple threats/triple plays/triple shots. These include Automatic Data Processing ( ADP ) and UnitedHealth Group ( UNH ). What do I mean?
For those who are especially attentive, my primary headline for this article may give the answer away. By triple shot, I mean a stock that provides shareholders with the following attributes:
- 1) Decent starting income. My requirement is generally that the starting yield is at least higher than the S&P 500 index's ( SP500 ) 1.4% yield. I also generally prefer that the yield be greater than the sector median per Seeking Alpha's Quant System.
- 2) Solid earnings growth potential. The metric that I typically like to examine is the 3-5Y CAGR for EPS forward long-term growth in the Quant System.
- 3) A discounted valuation. This can be relative to a company's fundamentally justified valuation and/or its sector median. A helpful metric can include the forward non-GAAP PEG ratio within Seeking Alpha's Quant System.