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GlaxoSmithKline plc (ADR) (GSK), AstraZeneca plc (ADR) (AZN): Are These FTSE 100 Shares a Buy?

LONDON — I have recently been evaluating the investment cases for a multitude of FTSE 100 companies. Although Britain’s premier index has risen 8.7% so far in 2013, I believe many London-listed stocks still have much further to run, while others are overdue for a correction. So how do the following five stocks weigh up?

GlaxoSmithKline plc (ADR) (LSE:GSK)
I reckon that accelerating product-development and moves into exciting new territories should barge GlaxoSmithKline plc (ADR) (LSE:GSK) back to growth over the medium term, underpinning its reputation as a dependable income play.

GlaxoSmithKline plc (ADR) (NYSE:GSK)

The company boasts an exceptional dividend-building record, even in times of earnings pressure. The pharma giant increased last year’s payout to 74 pence from 70 pence in 2011 despite a declining bottom line, and this is expected to rise to 78 pence and 82.7 pence, respectively, in 2013 and 2014. And dividend yields during this period are expected to remain well ahead of the 3.2% FTSE 100 average, at 5.1% this year and 5.4% next year.

Earnings per share are predicted to rise 2% in 2013 following last year’s 1% drop before accelerating 9% higher in 2014 as new products come online and offset the consequences of expiring IP. The firm’s shares trade on a price-to-earnings ratio of 13.3 for this year and 12.2 for next year, which I consider a decent value given the dividend dependability and exciting growth prospects.

Tesco Corporation (USA) (NASDAQ:TESO)

I am backing giant greengrocer Tesco Corporation (USA) (NASDAQ:TESO) to bounce back from increased competition from both high- and low-end competitors as it takes a step back from its international operations to boost activity back home.

City analysts expect EPS to slide 16% in the year ending February 2013, results for which are due on April 17, before hitting back in the coming years. Respective rises of 6% and 8% are predicted for 2014 and 2015.

Tesco is a favorite among income investors thanks to its generous dividend policy — an anticipated dividend yield of 3.9% for 2013 is expected to climb to 4.1% in 2014 and 4.3% in 2015. And coverage of 2.1 times next year and 2.2 times in 2015 should provide investors with peace of mind, even in the event of fresh earnings attacks.

Sweetening the deal, the supermarket’s stock currently changes hands on a lowly P/E rating of 11.5 for 2014 and 10.7 for 2015. This provides a chunky discount to a forward earnings multiple of 13 for the broader food and drug retailers sector.

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