Picture supply: Getty Photos
On Friday (2 January), the FTSE 100 lastly broke by way of the ten,000 barrier for the primary time in historical past. It capped a superb 12 months for UK shares, but it surely does increase one fear for a lot of traders. Are they too late to learn from its resurgence?
My brief reply is not any. For these pleased to chase momentum, I feel the FTSE 100 may nonetheless have additional to run as world traders get up to what they’ve been lacking. And for these, like me, preferring shopping for shares after they’re undervalued and out of vogue, there are nonetheless a lot to select from.
Blue-chips are crimson scorching
The UK’s benchmark blue-chip index rose 21.5% final yr, having began 2025 at simply over 8,260. All dividends are on high. With the typical trailing yield north of three%, the full return was nearer to 25%.
After years of being ignored in favour of massive, brash Wall Avenue mega-caps, blue-chips are lastly again in vogue. As considerations develop about froth in US tech, traders have began to diversify and lots of appear genuinely shocked by how undervalued UK shares are.
Personally, I’m delighted. I’ve been filling my boots from the FTSE 100 lately, particularly high-yield dividend shares. I’ve locked in yields of as much as 10% and I’m now having fun with capital development as properly.
I’ve nonetheless received money sitting in my buying and selling account, and I’m weighing up the place to deploy it subsequent. I favour undervalued shares, and I nonetheless see loads of these round.
The FTSE 100 trades on a mean price-to-earnings (P/E) ratio of about 14.9, though some put it nearer to 17.7. Both approach, that’s hardly demanding, and miles cheaper than the S&P 500 on roughly 27.4. I don’t purchase the index itself although. I desire particular person shares, a lot of which look far cheaper nonetheless.
JD Sports activities Style is likely one of the most putting examples, buying and selling on a P/E of simply 6.9. Its shares have struggled as cash-strapped customers rein in spending and key companion Nike struggles, however I maintain the inventory and again it to get well over time.
Worldwide Consolidated Airways Group shares fly
Airways additionally look low cost. Funds provider easyJet trades on a P/E of simply 7.7, whereas Worldwide Consolidated Airways Group (LSE: IAG) stands at 8.7.
5 extra FTSE 100 shares have P/Es under 10. Hikma Prescription drugs and Centrica are each on 9.2, BT Group sits at 9.8, whereas Shell and cigarette maker Imperial Manufacturers commerce at 9.9.
I purchased Worldwide Consolidated Airways Group final yr. Its shares climbed nearly 40% in 2025 and are up 240% over three years as flying demand recovers strongly after the pandemic.
Often known as IAG, the group owns airways together with British Airways, which has benefitted from a rebound in transatlantic journey. Covid left it nursing heavy money owed, but it surely’s paying these down, has restarted dividends and even returned €1bn to shareholders by way of a share buyback.
Provided that efficiency, I’m a little bit baffled by its low P/E. My assumption is that airways will at all times commerce at a reduction due to the dangers concerned. Excessive mounted prices depart them uncovered to all the pieces from gasoline costs and strikes to excessive climate and recession.
Even so, I feel IAG remains to be price contemplating right this moment, together with the opposite low cost shares talked about right here. The FTSE 100 could also be flying, however there’s nonetheless loads of worth for these ready to perform a little digging.
