UK shares received a boost this week when better-than-expected inflation figures hit the newswires in the US.
And where the US goes, the UK is sure to follow – at least, that’s my expectation.
But regardless, I think the positive reaction of UK shares to the inflation news demonstrates how desperately stocks want to rise. To me, they look like athletes waiting for the starting gun. And I feel certain that a new, broad-based and enduring bull market will soon gather momentum for UK stocks.
Value has been building
Meanwhile, many businesses have been surprising the market with good news about trading. And there’s every reason to believe that value has been building behind UK shares.
And that belief has been with me for several weeks and months. So as opportunities have arisen, I’ve been buying stocks and shares for some time. Now I’m fully invested – and it’s so frustrating.
Before my very eyes, many stock opportunities have been lining up for the grabbing. But I’m powerless to take advantage of them because of the shortage of spare, uninvested funds.
Nevertheless, my watchlist has been growing with candidates for a diversified portfolio. And although I can’t buy them, it’s worth mentioning them so other investors can pile in with their own research and due diligence.
A newly invigorated retailer
For example, retail stalwart Marks & Spencer (LSE: MKS) finally seems to be turning itself around. And the shares have been responding well to improvements in the business.
With the share price around 198p, its doubled since October 2022. And it’s up by just over 50% over the past year.
However, City analysts’ forward projections for earnings and shareholder dividends are robust. And as recently as 2015, the stock was well above 500p.
The retail scene has been in a state of flux over that period. And competition on the high street has reduced for the company. But that’s not all. Pure online retailers like ASOS and others have been struggling. And the new purple patch for retailers is to have a strong digital presence as well as brick-and-mortar outlets.
Well placed to thrive
M&S is well placed to take advantage of that trend. Its online sales have been growing as well as its physical store sales. And I’d put the company in an elite group with other strong retailers well equipped for the retail trends of today. To me, it sits well alongside names such as Next, Dunelm and Burberry.
I’m not blinkered to the risks. All retail operations have a particular vulnerability to ups and downs of the wider economy. And shareholders could suffer badly if a protracted downturn arrives in the years ahead.
But M&S chief executive Stuart Machin was upbeat in May. The directors are determined to reshape the business for growth. And just one year into the plan, Machin said operations had already delivered “sustained” trading momentum.
Future progress isn’t certain or guaranteed. But it wouldn’t surprise me to see the share price back above 500p in the coming years if the company can keep its turnaround turning and build sustained business growth upon that base.
