3 key stocks to watch as factories report output decline

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3 key stocks to watch as factories report output decline

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 3 key stocks to watch as factories report output decline
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Highlights 

  • The S&P Global/CIPS PMI composite flash estimation fell to 50.9 in August.
  • Though the service sector's activity grew nearly at July's speed, the manufacturing section plummeted from 52.1 in July to 46.0 in August.

With the factory output falling, the UK's private sector crawled in August, according to a survey published on Tuesday. While the larger services sector gained, its expansion was only moderate, adding to further signals of the economy nudging towards recession. However, economists believe that the inflationary pressures will continue to be high, and the looming slump will not likely prevent the Bank of England (BoE) from lifting the interest rates again over the coming months.

The S&P Global/CIPS Purchasing Managers' Index (PMI) composite flash estimation fell to 50.9 in August. The latest fall is lower than the July data at 52.1. This is the lowest level it has hit since February 2021 and is close to the 50 level that splits shrinkage from growth. According to the economists surveyed by Reuters, it was estimated that the value of the index would drop less rapidly to 51.1.

                                                         ©2022 Kalkine Media®

Though the service sector's activity continued to grow nearly at July's speed, the manufacturing sector plummeted from 52.1 in July to 46.0 in August, hitting its lowest level since May 2020. As per different statistics released by the Confederation of British Industry (CBI) on the same day, the factory output has fallen for the first time since February 2021, along with the maximum weakening of the order book since April that year.

The UK's composite PMI, comprised of manufacturing and services, surpassed that of the euro zone, which was pushed more into the recession zone as growing energy prices, resulting primarily due to the Russia-Ukraine war, led to a contraction in consumer spending. BoE has predicted that CPI levels would exceed the 13% mark by October as the energy bills continue to rise, pushing the UK into a recession by the end of the year.

Amid the ringing recession alarms and falling factory output, Kalkine Media® deep dives at 3 stocks which may help the UK investors strengthen their portfolio. 

Telecom Plus plc (LON: TEP)

The shares of the multi-utility UK-based supplier of electricity, broadband, and other services, Telecom Plus plc, was trading at GBX 2,055.00 as the market opened at around 8:00 AM (GMT+1) on Wednesday. The market capitalisation of the FTSE 250 constituent stood at £1,629.64 million. Its EPS stands in the positive zone as of 24 August, at 0.45. The company has offered investors significant annual returns of 100.69%, while its YTD (year-to-date) returns stand at 29.57%. With a P/E ratio of 45.71, its yearly dividend yield stood at 2.8%.

Drax Group plc (LON: DRX)

The British power generation enterprise, Drax Group plc's shares were trading at GBX 732.00 at around 8:00 AM (GMT+1) on Wednesday. The market capitalisation of DRX stood at £2,933.38 million. Its EPS stands in the positive zone as of 24 August, at 0.20. The company has offered huge annual returns of 79.59% to investors, while its returns on YTD basis stand at 20.99%.

Mediclinic International plc (LON: MDC)

The Mediclinic International plc's shares on Wednesday were trading at GBX 496.80 as the market opened at around 8:00 AM (GMT+1) on Wednesday. The market cap of this FTSE 250 constituent stood at £3,662.63 million. Its EPS stands in the positive zone as of 24 August, at 0.09. The company has offered decent annual returns of 68.75% to investors, while its returns on YTD basis stand at 55.06%. With a P/E ratio of 24.26, its yearly dividend yield stands at 0.6%.

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