EXCLUSIVE I'm an investing expert: Here's where to find a bargain on the UK stock market
For so long, the US has been the focus for retail investors the world over.
Countless people will have found their portfolios heavily exposed to the US' S&P 500 and the 'magnificent seven' tech stocks, and for good reason.
Over the past five years, the S&P 500 has risen 101 per cent, while the magnificent seven (Tesla, Amazon, Microsoft, Apple, Nvidia, Alphabet and Meta) have all seen strong growth.
Nvidia, something of a special case, has gained almost 1,400 per cent over the past five years.
In spite of the gains seen by these stocks, investors risk leaving all of their eggs in one basket.
This is where the importance of diversification becomes apparent, with the recent tariff announcements made by Donald Trump having shown how quickly gains can be reversed.
Meanwhile, as the FTSE 100 continues to make record gains, the rest of the UK market remains largely unloved, pushing the Government to make clear its intention to drive retail investment in a bid to boost the UK economy.
Recent years have seen a wealth of public UK firms ditching their listings on the main market – 88 last year alone – as many bet instead on more favourable listing options.
For all the negatives though, there are plus sides. The UK market is generally cheaper than its US equivalent, but not for lack of value.
In fact, according to trading platform IG, there are hidden value diamonds still remaining in the rough.
Where to find a bargain on the UK stock market
Chris Beauchamp, chief market analyst at IG, told This is Money that certain UK firms, have one thing in common.
Despite their low share prices, they aren't cheap as a result of being poor-quality.
'This is a classic case of strong performance being ignored by the wider market,' he says.
'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.
'These UK names aren't cheap because they've struggled – they're cheap despite delivering. That's what makes this list particularly interesting for value-minded investors.'
Some firms, such as Smiths Group have seen strong share price movements, growing 19 per cent since the start of the year alone. Including dividends, the firm has seen its total return grow by 94 per cent over the past five years.
The firm has grown its earnings per share consistently since 2020, but its price to earnings ratio currently sits at 23, 91 per cent below its five-year average.
A low price to earnings ratio can be an indicator that a certain stock is undervalued, though this isn't always the case.
The biggest grower over the past five years was Drax Group, returning 279 per cent over the period, despite its PE ratio being 4 - 60 per cent lower than its five-year average.
Meanwhile, Sainsbury's has returned 92 per cent over five years, with its PE ratio sitting at 15, 64 per cent below the five-year average.
The supermarket plans to open 15 new stores this year, which it said is its 'most significant investment in new supermarket space for many years.'
Also on the high street, bakery chain Greggs operates on a PE ratio of 14, 30 per cent below its five-year average. Despite having lost 27 per cent so far this year, the firm's total return remains above 50 per cent for the past five years and shares have surged recently.
The firm posted a 7.4 per cent increase in sales to £784million in the first 20 weeks of the year.
Greggs plans to open 150 new bakeries this year, pushing towards its goal of surpassing the 3,000. Currently the firm has 2,638 bakeries, having opened 20 new locations in 2025 so far.
Heavily Covid-impacted cruise operator Carnival also made IG's list, with a PE ratio lagging 37 per cent behind its five year average.
The company has returned 79 per cent over the past five years, but shares have dropped 12.6 per cent this year.
IG said Carnival's price remains 'well below pre-Covid norms.'
Beauchamp added: 'For years, UK stocks have been ignored by global investors, but that view is starting to change.
'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.'
Also on the bargain list were Spire Healthcare, lagging 26 per cent behind its five year average PE ratio, while 4imprint is 34 per cent below its own average. Spire has returned 119 per cent over five years, while 4imprint has returned 120 per cent.
Convatec, Admiral and PPHE have seen their price to earnings ratio fall 32 per cent, 25 per cent and 24 per cent respectively, despite five year returns of 49 per cent, 102 per cent and 46 per cent each.
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