In today’s volatile market, finding reliable stocks that offer both stability and growth can be challenging. However, there are plenty of FTSE 100 stocks that stand out to me as compelling investments. Here’s one I’d buy at the next opportunity.

AstraZeneca

AstraZeneca (LSE:AZN), the biopharmaceutical giant, is my first pick in the FTSE 100. With a market cap of £191.4bn, it’s a heavyweight in the pharmaceuticals industry, focusing on discovering, developing, and commercialising prescription medicines.

According to a discounted cash flow (DCF) calculation, the firm is currently trading at a staggering 34.9% below its estimated fair value. Of course, this isn’t a guarantee of value, but definitely shows potential.

The company’s future looks bright. Analysts forecast annual earnings growth of about 15% over the coming few years, indicating strong potential for capital appreciation. This growth isn’t just speculative. Earnings grew by an impressive 34.6% over the past year, demonstrating its ability to deliver robust financial results.

Ticking the final box for me, AstraZeneca offers a reliable dividend yield of 2%. Although not the highest in the market, the company’s payout ratio of 71% suggests the dividend is sustainable, especially considering its strong earnings growth.

Product line-up

The company’s success is underpinned by its robust product line-up. Key drugs like Tagrisso, Imfinzi, and Lynparza in oncology, Farxiga in diabetes, and Breztri in respiratory diseases are driving revenue growth. By building a strategic focus on high-growth areas like oncology and rare diseases positions, the business appears well positioned for the future.

During the pandemic, AstraZeneca gained global recognition for its Vaxzevria Covid vaccine. But its story doesn’t end there. Recent updates show continued innovation, such as positive results from the Phase III trial of Sipavibart, a long-acting antibody for preventing Covid in immunocompromised patients. This demonstrates AstraZeneca’s adaptability and commitment to addressing urgent medical needs, which may set it apart from other companies in the sector.

Risks

Of course it’s not all good news. There’s also a huge amount of competition to consider here. With many companies racing to approval for new products, problems in development can have enormous repercussions.

The financials also show some areas of concern, such as a high level of debt, but for me it’s essential to view this in the right context. High debt is never good, but it’s also common in the pharmaceutical industry, where companies invest heavily in R&D to develop new, potentially blockbuster drugs.

The price-to-earnings (P/E) ratio of the company at 39.2 times is also pretty high, and significantly above the average of the sector at 25.7 times. With plenty of future earnings seemingly in the share price already, any disappointment could lead to a major sell-off.

Overall

In summary, AstraZeneca offers a compelling mix of undervaluation, strong growth prospects, stable dividends, and a robust product portfolio. Despite some financial concerns, its strategic focus and proven ability to deliver make it a FTSE 100 stock I’d buy without hesitation. When I next have cash available, I’ll be picking up as many shares as I can.