M&G (MNG) & Associated British Foods (ABF): 2 blue-chip stocks to buy

Highlights 

  • M&G’ institutional AUM hit a record of £89.7 billion in H1 2021 due to EU based client inflows during the period.
  • Associated British Foods expects its Q4 2021 adjusted operating profit to be above expectations in its upcoming FY 2021 results to be reported next month.

The UK’s latest macro-economic scenario has been dominated by concerns of a potential interest rate hike due to rising prices across various sectors amid a deepening supply chain crisis.

According to the Office for National Statistics, inflation eased marginally in September to 3.1 per cent, from 3.2 per cent in August. However, a rise in food, drinks and other prices have led to a rise in the UK’s cost of living recently.

Two FTSE 100 index constituents, UK based investment fund M&G PLC and food processing firm Associated British Foods, are in focus ahead of the UK’s budget next week.

The two stocks stand to be impacted by a potential interest rate hike.

Recently, the food processing sector witnessed some reprieve after the government entered a deal for the industry facing a carbon dioxide shortage.

The slight decline in inflation seems to have temporarily cooled the rising concerns of a potential interest rates hike.

The financial services sector index, one of the major rates sensitive sectors, was trading in the green following the news at 13,118.27, up by 0.08 per cent on Wednesday at 12:10 PM BST.

Let us explore the above mentioned 2 blue-chip stocks and their investment prospects:

  1. M&G PLC (LON: MNG)

M&G is a UK based leading global investment manager for individual and large institutional investors like pension funds

The group is among several other major UK funds that were clamping down on the gender pay gap in the country.

Most of the major UK based funds, including M&G, have said that the disparity in pay was due to more men holding senior positions than women.

The group’s institutional assets under management (AUM) touched a record high of £89.7 billion in H1 2021, due to net client inflows worth up to £2.2 billion, from largely European clients.

The company’s adjusted operating profit before tax was up by 6 per cent to £327 million in H1 202 from the year before.

MNG share price and volume

(Image source: Refinitiv)

M&G’s shares were trading at GBX 196.95, down by 0.18 per cent on 20 October 21 at 12:10 PM BST. The FTSE 100 index was at 7,221.71, up by 0.06 per cent.

The company has a market cap of £5,129.62 million and a one-year return of 17.99 per cent as of Wednesday.

  1. Associated British Foods PLC (LON: ABF)

Associated British Foods is a UK based multinational food processing and retailing company.

The company, which owns retail brand Primark, stated that it launched a new Primark Cares initiative aimed at achieving its ESG goals.

Some of its commitments include reducing Primark’s carbon emission by 50 per cent across its value chain, providing a living wage for its workers across its global supply chain, all of its clothes made from sustainably sourced material by 2030. 

In its latest trading update, the company said it expects its Q4 2021 adjusting operating profit for its food and Primark businesses to be over its previous estimates. The company is expected to announce its FY 2021 results on 9 November.

ABF share price and volume

(Image source: Refinitiv)

Associated British Foods’ shares were trading at GBX 1,769.00, down by 1.17 per cent on 20 October 21 at 13:14 hrs BST. The food products sectoral index was at 6,290.07, down by 0.51 per cent.

The company has a market cap of £14,170.97 million and a one-year return of 1.26 per cent as of Wednesday.

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