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A number of FTSE 350 (^FTLC) stocks are trading on steep discounts, despite having outperformed the UK market over five years, according to an analysis by trading and investment platform IG.
The list of companies ranges from household names to industrial firms, that are trading on a significantly lower price-to-earnings (p/e) ratio, compared to their five-year average.
A p/e ratio measures a company’s current share price against its earnings per share and is used by investors to help determine how attractive its stock is, as a lower p/e ratio can indicate that a company is undervalued.
“With such a heavy focus on US tech and the hugely volatile global macro environment, UK investors may have missed some of the quiet compounders closer to home, something recently noted by BlackRock’s Larry Fink,” said Chris Beauchamp, chief market analyst at IG.
“These UK names aren’t cheap because they’ve struggled – they’re cheap despite delivering,” he said. “That’s what makes this list particularly interesting for value-minded investors.”
This comes despite the fact that the FTSE 100 (^FTSE) hit a fresh all-time high in March and is currently trading near record levels. The FTSE 100 is up 6.9% year-to-date and the FTSE 350 – which covers the UK’s large and mid-cap stocks – is up 6.1% so far this year. US markets, meanwhile, have experienced more volatility as US president Donald Trump pushed ahead with his tariff agenda. Choppy trading has left the S&P 500 (^GSPC) 0.7% in the red year-to-date.
“For years, UK stocks have been ignored by global investors, but that view is starting to change,” said Beauchamp. “A cooling inflation picture, renewed interest in income-generating assets, and the prospect of several rate cuts this year are creating a very different environment. If global capital starts to rotate back into value – the UK is well placed to benefit.”