UK stocks are still cheap even as the FTSE 100 makes new highs

A series of takeover bids have pushed up the price on a number of UK stocks. But Stephen Wright thinks there are still shares to consider buying.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

British Isles on nautical map

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The best time to buy shares is when they’re trading at low prices. And even with the FTSE 100 making new highs, I think UK stocks still look like good value.

A handful of stocks have been pulling the index higher in 2024. But beneath the surface, shares in quality companies have been underperforming since the start of the year. 

Takeover time

Rising share prices aren’t always a sign of improved business performance. Anglo American, Hargreaves Lansdown, and D.S. Smith have both been the subject of takeover bids.

Should you invest £1,000 in JD Sports right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if JD Sports made the list?

See the 6 stocks

This has caused share prices for all three to rise sharply. Shares in D.S. Smith are up 21%, Anglo American shares are up 22%, and HL shares are up 45% since the start of the year.

These kinds of results have helped pull the FTSE 100 to record highs last month. But there isn’t much investors can do to try and take advantage directly. 

Looking past these results, performances have been much more varied. And it’s especially worth noting that some of the strongest businesses have produced the weakest returns.

Winners and losers

Here are the top five stocks from the FTSE 100 by share price performance since the start of January:

Rolls-Royce+53%
NatWest+45%
Hargreaves Lansdown+45%
Barclays+40%
Intermediate Capital+36%

With the exception of Hargreaves Lansdown, there’s a bit of theme here. The best-performing stocks have been ones recovering from the Covid-19 pandemic.

Created with Highcharts 11.4.3Rolls-Royce Plc + NatWest Group Plc + Barclays Plc + Intermediate Capital Group Plc PriceZoom1M3M6MYTD1Y5Y10YALL8 Jun 20198 Jun 2024Zoom ▾Jul '19Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24www.fool.co.uk

Elsewhere, growth stocks have been struggling. Bunzl (-7%), Rightmove (-2%), and Rentokil Initial (-3%) have all posted negative returns while the FTSE 100 has gained 7%.

Created with Highcharts 11.4.3Bunzl Plc + Rentokil Initial Plc + Rightmove Plc PriceZoom1M3M6MYTD1Y5Y10YALL8 Jun 20198 Jun 2024Zoom ▾Jul '19Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24www.fool.co.uk

I think this gives investors a good idea about where to look for buying opportunities. But there’s one in particular that stands out as worthy of some careful consideration.

Quality on sale

Since the start of the year, shares in Croda International (LSE:CRDA) have fallen by 13%. And the stock hasn’t shown any real sign that a turnaround is imminent.

The chemicals company has been hit by weak demand as customers work through high inventory levels compiled during the pandemic. But that can’t last forever.

There’s a risk the unusually high profitability levels of 2021 might not return. But I think things are very likely to improve from where they are now.

As things start to normalise, sales should recover and high barriers to entry for competitors mean Croda stands to benefit. This could well be a stock set for a big recovery.

Opportunities

The FTSE 100 is making new highs, but it’s not the case that share prices across the board have been climbing. Takeover bids have accounted for a significant amount of the returns.

A number of stocks have fallen since the start of the year, including some quality businesses. As a result, I still think there are opportunities worth considering in the UK.

Should you invest £1,000 in JD Sports right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if JD Sports made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc, Bunzl Plc, Croda International Plc, DS Smith, Hargreaves Lansdown Plc, Rightmove Plc, and Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »