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When I asked ChatGPT what the best UK shares to buy right now are, Rolls-Royce, BP, and Greggs all got honourable mentions. But its top pick was FTSE 100 firm AstraZeneca (LSE:AZN).
That surprised me a bit – the stock has slightly outperformed the FTSE 100 this year, but it’s still a lot cheaper than it was a year ago. Nonetheless, I have to admit the chatbot made a pretty good case.
AstraZeneca
AstraZeneca’s recent half-year results were pretty impressive. Revenues were up 18%, driven by strong sales of its own drugs and its collaborative projects with other organisations.
That’s impressive, but the real key is the outlook. According to ChatGPT, the company has a robust pipeline with around 40 projects in Phase III trials.
The stock is also popular with analysts – the average price target is around 36% above the current share price. If it reaches that level in the next year, it might well be the best UK stock to own.
Despite this, I’m not looking to buy shares in AstraZeneca at the moment. I’ve nothing against what ChatGPT says about the stock, but I find it very hard to understand the company in detail.
The pipeline is a good example. The average approval rate for Phase III drugs is around 60% but that doesn’t tell me much about the company specifically.
Given this, buying the stock would be a speculative – and therefore risky – move for me. So while ChatGPT might be on to something, AstraZeneca isn’t top of my list of UK shares to buy right now.
A different idea
WH Smith (LSE:SMWH) didn’t even feature on ChatGPT’s list of top stocks. But I don’t think it takes a lot of specialist knowledge to see why this is an investment that could work out well over time.
The company isn’t doing anything massively innovative in terms of cancer treatments or obesity medication. But it has just made a big move that I think is both significant and easy to understand.
Officially, WH Smith has just sold off its high street shops. In my view, it practically gave them away, but I don’t mind that since it means the firm can focus on its much more promising travel division.
These are stores located in airports, hospitals, and train stations. In other words, venues where there’s much less competition than there is on the high street.
That’s not to say there are no risks. A global recession is probably the biggest threat to the stock market overall and depending on travel demand makes WH Smith more exposed than most.
Nonetheless, the stock has an enterprise value of £1.79bn and the travel stores generate around £189m in trading profits. On that basis, I think the stock is well worth considering.
Investing principles
Will WH Smith do better than AstraZeneca in the future? I don’t know – a lot depends on what happens with the pharmaceutical company’s ongoing trials.
If things go well, the stock could be an outstanding investment. But I’m not in a position to see this for myself, so I’m not buying the stock.
More importantly, I don’t see a need to rely on ChatGPT for stock ideas. I think there are plenty of UK shares that look attractive at the moment that I can make sense of, so I’m focusing on those.
