I already hold a host of FTSE 100 stocks. The index, while having a considerable weighting towards energy and resources, provides me with exposure to a wealth of blue-chips in many sectors.
Today, I’m looking for stocks that could benefit from profound demographic changes that we’re likely to experience over the coming decades. So what are these changes and which firms could benefit?
Demographic changes
We all know about ageing populations. This is particularly the case in Europe, the US and China. With age comes increasing risk of illness, and naturally, this creates demand for healthcare and treatments.
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But there are also profound changes in working-age populations. Around the turn of the millennium, we saw positive changes in labour supply. Factors including China’s demographic boom and the opening up of Eastern Europe were key to this.
A positive supply of labour led to low levels of inflation, low interest rates and near constant economic growth, albeit with stagnant wage growth.
However, things are changing. Wage stagnation has triggered a wave of popularism, especially in Europe, and we’re no longer seeing growth in the labour market. In fact, the UK labour market is particularly tight with some 10m people economically inactive — that’s unsustainable and unaffordable.
Stocks to prosper
Naturally, I’m looking at pharmaceuticals and biotech. AstraZeneca is one such FTSE stock.
The British pharma giant has a monoclonal antibody drug in stage I trials that aims to target a toxin that impacts the build-up of plaque on the brain. Early trails of MEDI1814 suggests the treatment could be highly effective in slowing or preventing Alzheimer’s disease.
In the UK, the rate of dementia per 1,000 people is expected to reach 29.3 by 2050. That’s just above the OECD average of 29.1. The illness is likely to be most prevalent in Japan.
This stage I trial isn’t the only reason I’m interested in AstraZeneca. After all, drugs trials often fail. However, it has a huge portfolio of drugs, treatments and vaccines, many of which are geared towards the challenges of ageing populations. I’m currently looking for an attractive entry point to buy the medical giant.
I’m also looking to buy more GSK shares. GSK generated £29.3bn in revenues last year, a 13% increase over 2021 at constant exchange rates. After the split with Haleon, the company is already starting to look like a leaner and more focused medical giant. I’m aware of the risks associated with the Zantac legal cases. However, I think the risk is already priced in.
Robotics solution
Finally, I’m increasingly interested in Ocado, a firm I’ve paid little attention to in recent years. The company is more than just an online grocery retailer. It deploys advanced robotics and AI to maximise operational efficiency. The company has struggled to turn a profit in recent years — and this is a concern — but the robotics side of the business could be lucrative in the years to come.
With labour shortages, having a warehouse automation system can prove advantageous. Other leading retailers are now licensing Ocado’s robotics solution for their logistics operations. I see this ‘solutions’ side of the business gaining momentum in the coming years, even if the retail segment continues to struggle.
