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2025 was a outstanding yr for FTSE shares. In actual fact, the UK’s flagship FTSE 100 index delivered a jaw-dropping 26.8% complete acquire. And even in 2026, following a latest pullback, the index nonetheless continues to march larger.
However does this new momentum now imply time’s operating out for traders to snap up low-cost UK shares?
What’s happening with FTSE shares?
There are lots of elements behind the FTSE 100’s large outperformance final yr. However one of many largest drivers is one thing known as capital migration. With US inventory valuations reaching report highs and uncertainty creeping into the American economic system, traders worldwide have begun rebalancing their portfolios. And lots of this capital has began shifting into different markets, together with the UK.
That isn’t shocking given the big low cost that UK shares commerce at versus worldwide friends. For reference, the common earnings a number of for a FTSE 100 inventory is round 15. Within the US, it’s at the moment nearer to 25.
With extra uncertainty now creeping into the US inventory market on the again of AI disruption fears and surging international oil & gasoline costs, this capital migration may proceed. And which means 2026 may very well be one other gangbuster yr of development for FTSE shares.
Is time operating out?
Capital migration creates a robust tailwind for the UK inventory market. However it’s vital to spotlight that the persistent low cost in valuations isn’t random. It’s pushed by a equally persistent financial development and productiveness drawback – one thing that successive governments have failed to unravel.
So which shares ought to traders be taking a look at as we speak?
A prime worth choose?
Based on the crew of knowledgeable analysts at Peel Hunt, Domino’s Pizza Group (LSE:DOM) may very well be probably the most misunderstood FTSE shares available on the market as we speak. It’s a extremely cash-generative franchise enterprise that’s been serially re-rated downwards, regardless of taking market share because of a structurally sound enterprise mannequin.
The corporate generated £80.7m of free money move in 2025, enabling administration to proceed increasing its franchise empire in addition to concurrently investing in its industry-leading know-how infrastructure. As a substitute, its rivals have been busy closing shops.
Regardless of this, Domino’s shares are buying and selling at their lowest level in over a decade. But some warning’s justified.
Stagnant top-line development alongside constantly rising value pressures, courtesy of meals and wage inflation, is placing lots of strain on the underside line. And this impression is barely being compounded by the weak spot in UK shopper spending.
However trying on the Domino’s share worth, this FTSE inventory’s seemingly been repriced as if these issues are structural when, in actuality, they seem like cyclical. Peel Hunt has come to the same conclusion, issuing a 275p share worth goal – nearly 60% larger than the place the inventory trades as we speak.
There’s no denying the near-term earnings image’s cloudy. However looking to the long term, Domino’s extremely money generative enterprise mannequin completely positions the corporate for a doubtlessly spectacular rally as soon as shopper spending begins to bounce again. It’s price a better look.
