The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.
Developing an effective and low-cost vaccine to tackle the COVID-19 virus has put pharmaceutical giant AstraZeneca (LON:AZN) firmly in the spotlight. The world-changing ‘Oxford’ vaccine gave AstraZeneca a chance to show off its expertise and made it a household name. The truth is that many stock market investors were already watching the firm and making profits from their shareholdings.
AZN offers investors a blend of security and capital returns, and recent events look set to add momentum to a 10-year uptrend, making now the ideal time to buy AstraZeneca shares.
This review will break down the reasons why AstraZeneca shares might be just what the doctor ordered. It will also outline how to go about buying the shares using a trusted broker.
AstraZeneca plc is a British-Swedish multinational pharmaceutical and biopharmaceutical company, which is headquartered in Cambridge, England. It is a long-established pharma giant formed by the merger between Swedish Astra AB and British Zeneca Group in 1999. Since then, it’s expanded its operations via organic growth and by buying up other smaller firms.
The market capitalisation of around $100bn puts it in the top five firms by size in the FTSE 100 index. Big-pharma is, however, a global industry full of heavy-hitters, and AZN ranks only 12th by size in the index of pharmaceutical companies across the world.
AstraZeneca’s primary listing is on the London Stock Exchange, where it trades under the ticker AZN, but it is also listed on a range of other exchanges, including the Nasdaq in New York. The secondary listings reflect the extent to which buying into the stock appeals to investors across the globe.
Investors considering taking a position in AZN aren’t faced with the question of whether AstraZeneca is a buy or a sell. The AZN share price doesn’t polarise opinion in the same way the price of Tesla stock or bitcoin does. It’s more a question of whether the returns can be bettered by taking positions in other stocks.
Companies with a 10-year share price similar to AZN are a popular target for professional investors such as pension funds. The question is whether the slow and steady approach fits your investment objectives. Conventional investment principles would say that having a portion of your capital allocated to a stock like AZN is an ideal way to make long-term returns.
If you buy in at the right time, when price dips, you can also make spectacular gains. From the low of June 2016 to the high of July 2020, the AZN share price rose in value by more than 175%. Not bad for a stock at the ‘safe-bet’ end of the investment spectrum, which, over the last five-years, has recorded dividend yields of between 2.6%–4.5%.
The strong fundamentals supporting the idea of taking a long position in AstraZeneca are backed up by technical indicators that point to the time to enter into a trade being right now.
Other factors that will influence the AstraZeneca share price valuation include:
Online brokers have revolutionised the investment sector and made buying and selling shares incredibly easy to do.
Once you’ve decided to buy shares in a company such as AstraZeneca, it takes a matter of minutes to set up an account and start trading. The below step-by-step guide explains how to go through the process and offers tips from experienced traders on how to get the best deal.
AstraZeneca’s business model relies on multi-year medical trials coming to fruition and being successful or not. This means most investors apply the principles of fundamental analysis and look into the details of the firm’s operations.
This kind of research and learning material comes as part of the package. If you choose a good broker, they’ll also have news services to help you spot potential catalysts for a share price rally.
AstraZeneca’s size means most brokers offer markets in it. All of those listed in the below table do so. The quality and quantity of research can differ from broker to broker, as some prioritise value-added services such as research and customer support. Others focus on hammering down costs.
Trying out a few demo accounts with different platforms can help you establish which approach suits you and also allows you to put on a risk-free trade using virtual funds and getting a feel for holding a position.
Making the decision to use a regulated broker can be as important as deciding what stock to buy and when. There are, unfortunately, scammers operating in the market and if you make the wrong choice, you can lose all your funds.
AskTraders regularly reviews the different brokers operating in the sector and a list of trusted FCA regulated brokers can be found here.
The online registration process for setting up a brokerage account is designed to be as user-friendly as possible. Regulated brokers have a duty of care to their clients, so have to ask a series of Know Your Client (KYC) protocols. These questions allow them to build a client profile and apply client protection appropriate to your circumstances.
Onboarding takes only minutes to complete and being asked questions relating to topics such as ‘any previous trading experience’ is actually a good thing as it’s a sign you’re using a responsible broker.
After the form filling is completed, it’s simply a case of depositing funds. Brokers offer a variety of payment methods, such as credit/debit cards and bank transfer. Some of the payment methods are cheaper and faster than others, so checking the T&Cs is a good idea.
The process used to buy or sell shares at a broker is very straightforward. All you need to do is locate the market you want to trade, such as AstraZeneca and the amount you want to buy or sell. This can be done by referencing the number of shares or the amount of cash.
There are additional order types that you can use to manage risk. These are instructions, which are built into the system so that the platform will automatically buy or sell if the AZN share price gets to a certain level.
These other order types are optional, but being aware of how they work means you can semi-automate your account management. This allows you to focus on the day job, but as they also manage risk, can also save you money.
One important tip is to check if stop-losses or take profits are included as default settings. At some brokers, they are, and if not adjusted, you might find you unintentionally traded out of a position.
Once you’ve decided to buy AstraZeneca shares, the final step is a simple click of a button or a tap of a screen. This will convert your cash balance into an equity position and the value of your holding will fluctuate according to live market prices.
Optimising your trade entry point is always an advantage and this article on the best time to trade offers an insight into how to try and work your way into a position at the best price level.
One final tip, as practised by experienced traders, is to check your positions straight after executing a trade. If you’ve made a ‘fat finger’ error, then it’s best to spot and rectify it straight away.
The good news for retail investors is that the administrative costs associated with trading have, in recent years, been driven down a considerable extent. Online broker platforms have automated a lot of the processes, which makes them more efficient than ‘voice brokers’ ever were, and competition between firms is fierce.
Trading is hard enough without frittering away cash on charges you might be able to avoid. One way to minimise drag on performance is to select a broker with transparent fee schedules and check through the T&Cs. Below is a list of cost items to look out for.
|Live Account Fee||No charge||No charge||No charge||No charge|
|Demo Account Fee||No charge||No charge||No charge||No charge|
|Bid Offer Spread – AZN shares||8.65p||36.9p||15p||9.6p|
|Cash Deposit Fee||No charge||No charge||No charge||No charge|
|Cash Withdrawal Fee||Yes – $5 per transaction||No charge||No charge||No charge|
|Inactivity Fee||Yes – $10 per month after 12 months inactivity||Yes – $10 per month after 3 months inactivity||Yes – $10 per month after 3 months inactivity||Yes – $50 per quarter after 3 months inactivity|
|FX Conversion Fee||Offers accounts in USD, only||Offers accounts in USD, GBP and EUR||Offers accounts in 14 base currencies incl. USD, GBP, EUR||Offers accounts in USD, GBP, EUR, CHF|
|Minimum Deposit||$200 (or equivalent)||$100 (or equivalent)||$250 (or equivalent)||$100 (or equivalent)|
The proposition to buy AstraZeneca shares is an attractive one. Previous performance is no guarantee of future returns, but the 10-year share price performance is impressive. Selling its Oxford vaccine at cost means it won’t profit from that program, but it does mean it has a valuable intangible asset in terms of the good-will towards the firm. This is never a bad thing for a big-pharma firm.
Accepting that the strategy is designed to provide a steady rather than a stellar return will be the final hurdle for many, but getting in on a dip in the share price can even result in ‘growth stock’ style returns. Technical indicators suggest the time to buy AstraZeneca shares is now, and choosing a trusted broker that offers security of funds is the final box to tick.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 75 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .