May 29, 2024
Stock Market

Gold is sure to keep its shine as fears of a stock market bubble mount

Moreover, the gold price is likely to be helped by expected interest rate cuts because they would reduce the relative appeal of income-producing assets such as cash and bonds. Should lower rates fail to materialise in the short run owing to persistent above-target inflation, gold’s status as a store of wealth is also likely to mean it produces favourable returns.

Indeed, the metal has generated a gain of 31.4pc in sterling terms since we added it to our portfolio in April 2021. 

Although it has benefited from favourable currency effects during that time, the bulk of our return is from a price rise in dollar terms. 

Its performance is well ahead of inflation; price rises amount to roughly 19pc during the holding period, and is significantly better than Bitcoin’s 15.1pc gain over the same period. 

Clearly, gold’s short-term returns could be dwarfed by a surging stock market as investors continue to pile into the likes of Nvidia, the AI chip maker. Ultimately, though, it is likely to be viewed as a highly prized holding if the tech bubble on Wall Street eventually bursts. 

Update: AstraZeneca 

While AstraZeneca’s shares have risen by 39pc and outperformed the FTSE 100 by 34 percentage points since Questor tipped them in August 2019, they continue to offer excellent value for money. 

The drugs maker trades at around 18 times earnings but, according to its full-year results released last month, should produce percentage growth in revenues and earnings in the low double-digits or low teens in the current year. 

When combined with its relatively defensive characteristics, which are further enhanced by a solid financial position, its risk/reward tradeoff remains highly appealing. 

The annual results were somewhat disappointing and prompted a 6pc share price decline on the day. This was largely because the company missed analysts’ earnings expectations: earnings before interest, tax, depreciation and amortisation (Ebitda) were $13.5bn, against analysts’ average forecast of $14.5bn, as a result of heightened costs associated with the launch of new drugs. 

Encouragingly, revenues rose by 6pc during the year. When the impact of a decline in Covid-19 medicines is excluded, sales were up 15pc, while revenues for its key oncology and cardiovascular, renal and metabolism segments both rose at a double-digit pace. 

Astra also raised research and development spending by 15pc. It now amounts to 24pc of revenue, against 23pc in the previous year, as the company remains on track to launch at least 15 new medicines by 2030. 

AstraZeneca is a relatively recent addition to our Wealth Preserver portfolio; we bought it in December. While its share price has fallen by 2pc since then, the company offers significant long-term capital growth potential. Its attractive valuation, growth opportunities and defensive qualities mean that index-beating performance is ahead. 

The stock is a hold as it is already in our portfolio, but readers without a holding may want to consider a purchase. 

Questor says: hold

Ticker: AZN

Share price at close: £102.34

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