AHT, DATA, EXPN: Should you consider these services sector stocks?

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 AHT, DATA, EXPN: Should you consider these services sector stocks?
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Highlights

 

  • Growth in UK's service sector slowed down in April in contrast with March, as per S&P Global/CIPS.
  • High cost of living and the Russia-Ukraine conflict are the key reasons behind the fall.

Rising inflation and the Russia-Ukraine crisis have begun to show their impact in the second quarter of this year as well. With people cutting down on expenses, the growth levels in the UK's service sector have slowed down, and business confidence has dropped to the weakest levels in the last 18 months, the latest report has found.

According to the S&P Global/CIPS, Purchasing Managers’ Index (PMI) for the service sector stood at 58.9 in April, against 62.6 in March. While a number above 50 is considered expansion in the activity, the drop from the previous month implies that new order growth took a hit.

Key reasons behind the decline

The fall in growth was due to rising input costs for products and services in the sector, which reportedly saw the fastest rise in 26 years. Rising energy and fuel costs have forced businesses to pass on these costs to consumers in the form of price hikes. The cost-of-living crisis in the UK has also subdued the business confidence as consumers have tightened their budgets owing to higher bills for food and energy.

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Image description: The cost-of-living crisis in the UK has also subdued the business confidence.

The survey also claimed that the war between Russia and Ukraine and subsequent sanctions along with supply chain disruptions were also responsible for restricting the growth in the sector. Even though there was some relief from the relaxations in COVID-19 restrictions, especially with the resumption of international travel, it wasn't enough to push the growth rate ahead of March.

Let us look at some service sector stocks and how they have been faring amid the development.

Ashtead Group Plc (LON: AHT)

The London-headquartered firm is engaged in the business of renting industrial equipment. It is listed on the FTSE 100 index and has operations in the UK, Canada and the US.

The shares of Ashtead Group were trading at GBX 4,105, down 1.21%, at 8:27 am GMT+1 on 6 May 2022. The current market capitalisation of the company stands at £18,029.24 million. In the last one year, it has given a return of -15.19% to the investors.

Related video: https://youtu.be/UNJo3uCr4zA

GlobalData Plc (LON: DATA)

GlobalData is a data analytics and consulting company and a constituent of the FTSE AIM 100 index. It is engaged in the business of providing proprietary data, analytics and insights to its customers.

At 8:24 am GMT+1 on 6 May 2022, the company's shares were trading at GBX 1,223.75. The company has a market cap of £1,469.93 million as of 6 May 2022 and its stock price has plunged by 23.52% over the past one year.

Experian PLC (LON: EXPN)

The leading global information services company offers analytical and decision-making tools to its customers in 37 countries. Experian's operations are segmented into varied services like credit services, consumer services and decision analytics.

At 8:32 am GMT+1 on Friday, its shares were trading at GBX 2,695.00. The company has a market cap of £25,286.15 million, and its share price has depreciated by 2.84% in the last one year as of 6 May 2022.

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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