BA., CRH, CRDA: Is it the right time to invest in manufacturing stocks?

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BA., CRH, CRDA: Is it the right time to invest in manufacturing stocks?

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 BA., CRH, CRDA: Is it the right time to invest in manufacturing stocks?
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Highlights

  • The output growth saw a decline in April, with higher inflation hitting the demand across several sectors.
  • Out of 14, eight sectors saw a drop in growth, while 11 reported weaker demand for new orders.

Inflation in the UK hit 9% in April, the highest in 40 years, as food and energy prices skyrocketed across the country. The soaring prices of essentials have forced people to spend less on other goods and services, leading to a dampening demand across most sectors. Moreover, the cost-of-living crisis has sparked fears that the UK is heading into a recession.

As a result, the output growth witnessed a decline in April. According to the latest Lloyds Bank (LON: LLOY) UK recovery tracker, which monitors the current trends in the UK economy, eight out of 14 sectors recorded a drop in growth month-on-month in April. On the other hand, 11 out of 14 sectors saw weaker demand for new orders during the period.

The data also revealed that the price customers were charged saw a record surge as the prices charged index of the tracker climbed to 69.4 in April from 68.3 in March. The price rises were the most common among manufacturing firms amid the sharp rise in energy, food, and raw materials. In particular, automobile and auto parts saw the biggest hike at 85.9, followed by food and beverages makers at 80.8.

April saw a decline in output growth amid the cost-of-living crisis.

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In the wake of the latest numbers, let us take a look at some manufacturing stocks listed on the London Stock Exchange and analyse their investment prospects.

BAE Systems Plc (LON: BA.)

The UK-based defence sector company offers technology products to its clients in 40 countries. For the year 2022, the company expects a 2-4% rise in sales over 2021.

BAE Systems holds a market capitalisation of £23,600.71 million as of 20 May 2022, and its shares were trading at GBX 750.40, up by 0.35%, at 9:05 am GMT+1. Shares of the FTSE 100-listed company have given decent performance over the past one year and have appreciated by over 45%. Its year-to-date (YTD) return stands at 36.27%.

CRH Plc (LON: CRH)

CRH is engaged in the business of diversified building materials and is listed on the FTSE 100 index. Last month, the company reported strong sales in the first quarter of 2022 in the UK and Ireland, reflecting good underlying demand.

Shares of the company traded at GBX 3,192.50, up by 2.03% at 9:20 am GMT+1 on 20 May 2022. Over the past one year, the share value has plunged by nearly 10%, while the YTD return stands at -18%.

Croda International (LON: CRDA)

The British speciality chemicals company operates in four segments, including personal care, industrial chemicals, life sciences, and performance technologies.

Shares of Croda International were up by 3.02% at GBX 6,748.00 as of 9:34 pm GMT+1 on 20 May 2022. The shares have given a return of 3% to the shareholders over the past one year, while the YTD returns stand at -33%. Croda International currently has a market cap of £10,888.04 million.

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. 

Tags: Manufacturing stocks, BAE Systems, CRH, CRDA

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