BATS, DGE, GSK: Should you invest in these manufacturing stocks now?

Highlights

• The UK manufacturers are cutting back on investments while aiming to forward the rising costs to the customers, according to the CBI.
• As per the CBI’s April survey, the average prices of raw materials and energy saw the sharpest rise since 1979, while over the next three months, further price growth is expected.

The UK manufacturers are becoming increasingly pessimistic amid the soaring inflationary pressure. According to a recent report published by the CBI, manufacturers are facing a lot of issues in dealing with the rapidly rising costs, and thus they are cutting back on investments while aiming to forward the rising costs to the customers.

Since the first lockdown that was implemented two years ago when the pandemic struck the UK, the optimism in the manufacturing sector is at the lowest level, as costs haven’t increased at this pace since 1975. The Russia-Ukraine war has led to the worsening of the already awful situation in the country. However, even during the rising inflation, manufacturing output and order books have grown over the recent months, slowly but positively.

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As per the CBI’s April survey, the average prices of raw materials and energy saw the sharpest rise since 1979, while over the next three months, further price growth is expected. In April, the balance of firms whose costs increased stood at +87 points, which was just one percentage point lower than the July 1975 level when the UK inflation crossed the 20% mark.

The market sentiment has been deteriorating lately with the Covid-related supply chain issues being exacerbated. The UK Government is expected to step up and help the UK manufacturing firms in tackling the ongoing crisis.

Let’s look at 3 UK manufacturing stocks that may be impacted with the rising costs.

British American Tobacco plc (LON: BATS)

The shares of the UK-based manufacturer of cigarettes, tobacco and other nicotine products, British American Tobacco plc, were up by 1.01% as the market opened at around 8:00 AM (GMT+1) on 26 April 2022, at GBX 3,316.50. The company, which is a constituent of the FTSE 100 index, has given its shareholders a return of 21.07% over the last one year as of 26 April 2022. The current market cap of the company stands at £74,652.69 million.

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Diageo plc (LON: DGE)

The shares of the UK-based beverage alcohol firm, Diageo plc, were up by 1.10% as the market opened at around 8:00 AM (GMT+1) on 26 April 2022, at GBX 3,981.00. The company, which is a constituent of the FTSE 100 index, has given its shareholders a return of 20.83% over the last one year as of 26 April 2022. The current market cap of the company stands at £90,670.75 million.

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GlaxoSmithKline plc (LON: GSK)

The shares of the leading UK pharma company, GlaxoSmithKline plc, were up by 1.02% as the market opened at around 8:00 AM (GMT+1) on 26 April 2022, at GBX 1,757.00. The company, which is a constituent of the FTSE 100 index, has given its shareholders a return of 30.77% over the last one year as of 26 April 2022. The current market cap of the company stands at £88,419.16 million.

Tags: inflation, CBI, costs, UK manufacturers, war, British American Tobacco, GlaxoSmithKline, Diageo, FTSE 100 index