Can AstraZeneca plc (ADR) (AZN) Outperform Merck & Co., Inc. (MRK)?

3. Growth
Even if your main interest is value or income investing, you do need to consider growth. At the very least, a company needs to deliver growth in line with inflation — and realistically, most successful companies need to grow ahead of inflation, if they are to protect their market share and profit margins.

How do AstraZeneca and Merck shape up in terms of growth?

Once again, AstraZeneca looks the more attractive of this pair, although I do have some reservations about the quality of its earnings growth, as I suspect much of it was generated by the hefty share buybacks the company has engaged in in recent years. These share buybacks have now stopped, freeing up cash to fund new drugs, but Merck’s strong revenue growth does look good in comparison to Astra’s stagnant performance.

Should you buy AstraZeneca or Merck?
The figures above suggest to me that AstraZeneca is currently a far more attractive purchase than Merck, and I believe that Astra’s newish CEO, Pascal Soriot — who has already announced several new joint ventures and shaken up the firm’s senior management — will succeed in his plan to turnaround his company.

Of course, if you already own shares in AstraZeneca, then you may be looking for another high-quality income opportunity, such as the one I mention below. With one week left until this year’s ISA deadline, it could be an ideal choice for topping up your ISA with an attractive, high-yielding blue chip stock.

The article Can AstraZeneca Outperform Merck? originally appeared on Fool.com.

Roland Head has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.