Stocks to eye amid less-than-expected economic growth

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Stocks to eye amid less-than-expected economic growth

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 Stocks to eye amid less-than-expected economic growth
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Highlights

  • UK's economic growth stood at 0.2% in July, which is lower than what was predicted.
  • The GDP was flat in the three months to July in comparison with the previous quarter.
  • Surging to a fresh 40-year high level of 10.1% in July, inflation has taken a toll on profits and incomes.

Amid the growing cost-of-living squeeze, economic growth in the UK has turned out to be slower than expected. According to the latest figures released by the Office for National Statistics (ONS), economic growth stood at 0.2% in July, which is lower than what was predicted.

However, despite being behind projections, it would still be considered a positive sign since the UK economy contracted by 0.6% in June. Considering the bigger picture, the GDP (gross domestic product) was flat in the three months to July in comparison with the previous quarter.

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Since the beginning of the year, the momentum of economic growth has been lost as households as well as businesses have been struggling with rising costs amid the inflationary crisis. Surging to a fresh 40-year high level of 10.1% in July, inflation has taken a toll on profits and incomes.

After declining by 0.5% in June, the service sector grew by 0.4% in July, and it was the primary contributor to July’s GDP growth. Leading the growth of the sector was information and communication, which rose by 1.5%. While production and construction continued with the downward trend, services, especially consumer-facing ones, were on a rise.

Let’s look at three London-listed service providers that UK investors can explore.

RPS Group plc (LON: RPS)

The market cap of the globally operating professional services organization, RPS Group plc, stands at £582.77m. RPS shares were trading at GBX 210.00 at 11:49 AM (GMT+1) on Monday. The company has provided decent returns of 74.28% and 69.02% to its shareholders on an annual and YTD (year-to-date) basis, respectively, as of 12 September. The EPS (earning per share) of the company stands in the negative zone at present, at -0.13. Offering an annual dividend yield of 0.4%, the company’s P/E ratio stands at 67.85.

Mediclinic International plc (LON: MDC)

The market cap of the diversified private group offering healthcare services, Mediclinic International plc, stands at £3,644.93m. MDC shares were trading at GBX 495.00, up 0.12%, at 11:56 AM (GMT+1) on Monday. The FTSE 250-listed company has provided decent returns of 58.45% and 54.99% to its shareholders on an annual and YTD basis, respectively, as of 12 September. The EPS of the company stands at 0.09 at present. Offering an annual dividend yield of 0.6%, the company’s P/E ratio stands at 24.14.

Airtel Africa plc (LON: AAF)

The market cap of the leading wireless telecommunication services provider, Airtel Africa plc, stands at £5,246.38m. AAF shares were trading at GBX 142.20, 1.86% higher at 11:59 AM (GMT+1) on Monday. The FTSE 100 company has provided decent returns of 50.99% and 6.21% to its shareholders on an annual and YTD basis, respectively, as of 12 September. The EPS of the company stands at 0.09 at present. Offering an annual dividend yield of 3.1%, the company’s P/E ratio stands at 9.10.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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