Picture supply: Vodafone Group plc
For a few years, UK shares have lagged their US counterparts in the case of valuation. Particular person shares might have bucked the pattern, however at a broad degree the US market has regarded extra expensive. That continues to be the case.
Nonetheless, many UK shares have seen their valuations improve over latest years. Simply have a look at the blue-chip FTSE 100 index. It has moved up by 52% over the previous 5 years. So may there nonetheless be worth to be discovered amongst UK shares in immediately’s market?
Not attempting to time the market
My reply is that sure, I feel there might properly be worth within the UK market immediately.
For now, I’ve no plans to purchase into the FTSE 100 general, for instance by investing in an index tracker. However what I’ve been doing in 2025 is shopping for particular person UK shares I feel are undervalued. I proceed to hunt for what I see as potential bargains.
I’m not attempting to time the purpose when the FTSE 100 begins to fall. That may occur in the end, although no person is aware of when. As an alternative, I’m searching for particular person bargains.
When is a discount not a discount?
The problem although, is that for each share somebody buys, somebody on the opposite facet of the transaction is promoting it. In different phrases, what appears like a discount to me might in actual fact change into a worth lure.
WPP and B&M European Worth Retail are two examples of shares I’ve purchased this 12 months within the hope that they provide long-term worth. Each have disillusioned the market with revenue warnings. B&M is down 53% thus far in 2025, whereas WPP has carried out even worse, shedding 64% of its worth because the flip of the 12 months.
I see them as being in numerous conditions. B&M has been struggling to show its relevance in a reduction retail market that ought to profit from resilient buyer demand. Against this, WPP’s downside is not only with its personal efficiency however with the affect of synthetic intelligence (AI) on its trade as an entire.
What each shares have in frequent is that, whereas my buy value might but change into a long-term discount, it may also be a worth lure.
In search of a margin of security
I really feel a bit extra assured about one other firm that warned on income earlier this 12 months: Greggs (LSE: GRG). Once more, maybe my confidence is misplaced. Misjudging client demand when the summer season started hotter than anticipated looks as if a fairly primary error for the retailer to make. I due to this fact understand a danger that poor demand planning might trigger extra issues in future.
However, like B&M, I feel Greggs advantages from a market that’s each large and set to stay that method. Individuals must eat and the baker’s modestly-priced merchandise have legions of followers.
I additionally just like the margin of security I feel Greggs’ distinctive proposition offers the corporate.
There are different bakers and purveyors of low-cost meals. However Greggs has carved a singular id in the case of low-cost and handy savoury snacks, meals and candy treats.
From a long-term perspective, it is without doubt one of the UK shares I feel deserves a a lot greater value than it at the moment has. I’ve no plans to promote.
