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On one hand, UK shares can appear like good worth in comparison with many US shares proper now.
However, many UK shares could look overvalued in goal phrases.
This 12 months has seen the flagship FTSE 100 index of main shares has repeatedly hit new all-time highs. But the British financial system is trying sluggish.
May it’s the case that, after a interval of robust efficiency, a weak financial outlook begins to weigh extra closely on the UK inventory market?
Restricted drivers for progress
I believe it may.
In spite of everything, markets can solely defy financial gravity for thus lengthy (albeit that may generally be fairly lengthy!)
Whereas UK shares as an entire could not presently look overvalued, what I’m not seeing is obvious drivers to assist hold pushing them upwards, given a reasonably weak financial outlook.
As some traders transfer cash out of the US because of political uncertainty and look to redeploy it in different markets, UK shares may benefit.
However by way of underlying enterprise efficiency, the UK market as an entire presently lacks apparent progress drivers. I believe that will present by sooner or later by way of weaker investor enthusiasm as UK share costs hold rising.
Market timing is a mug’s sport
Nonetheless, there isn’t any dependable indication of when that will occur.
On high of that, I might be mistaken about the place the financial system goes.
Thus far, 2025 has been illustrative of this on the world degree. There have been a number of considerations concerning the financial system, however markets have largely taken them of their stride.
Right here’s my strategy
Both means, my strategy is to not try to time the market, however moderately all the time to see whether or not I can spot high-quality companies promoting for significantly lower than I believe they could in the end be price.
Clearly, if the inventory market crashes, I might be completely happy to try to scoop up some bargains.
However even when the general market has been doing properly – like now – I believe some UK shares could proceed to supply me potential worth.
I’ve been shopping for
For instance, one share that has been doing properly recently is transport specialist Journeo (LSE: JNEO).
It now trades on a price-to-earnings ratio of 20. That doesn’t appear clearly low cost.
Nevertheless, whereas bus shelter timetable data won’t be the kind of tech product that units the NASDAQ alight, Journeo is amongst UK shares benefiting from pretty simple however sensible real-world functions of proprietary know-how.
With public sector spending at excessive ranges, I believe the corporate may hopefully proceed to win a number of contracts. Every one it wins not solely boosts revenues, but additionally helps enhance its credibility with different potential purchasers.
An excessive amount of dependence on native authority prospects is a threat, if they should begin chopping their budgets. However Journeo has a number of potential for worldwide progress, too, as its work with the New York Metropolis subway demonstrates.
