UK shares can’t seem to slow down. The FTSE 100 has made an epic recovery since it nosedived to 5,190.8 points at the outbreak of the pandemic. It’s reached new highs this year and I reckon it could have a lot further to go.
That’s because many UK-listed companies, despite the recent rally, still look undervalued. Investor sentiment surrounding the domestic stock market seems to be rising. With that, I reckon it’s time to go shopping.
That’s not to say that there won’t be volatility. Interest rate cuts and inflation will still have a large influence over market performance.
But there’s an abundance of cheap buying opportunities to explore at the moment. Here are two I think investors should consider. If I had the cash, I’d buy them today.
Marks and Spencer
Shares in retail giant Marks and Spencer (LSE: MKS) have seen a decent performance so far this year after a strong 2023. Year to date, they’ve climbed 5.4%.
However, after falling 5.9% across the last month, I think this could be a buying opportunity. Its shares now trade on 14.1 times earnings. In my eyes, that’s decent value for a business of Marks and Spencer’s stature.
The retailer had massively fallen behind its competitors in recent years. Outdated stores and products saw it struggle to keep up. But with a new turnaround strategy in place, led by CEO Stuart Machin and his predecessor Steve Rowe, it’s flying.
I still see it facing issues. The cost-of-living crisis is one. A downturn in the economy could see people cut back on spending. Competition also remains a threat.
But with interest rate cuts expected over the coming months, I think the retail sector should be provided with an uplift as spending hopefully begins to pick up again. That should offer the stock a boost.
Barclays
I also continue to like the look of Barclays (LSE: BARC). Since first buying its shares back in August last year, I’ve enjoyed decent success. But even after rising 41.9% so far this year alone, I’m planning on buying more shares.
The stock looks dirt cheap. Right now, it’s trading on 8.6 times earnings. Barclays’ price-to-book ratio is just 0.4, where 1 is considered fair value. It’s for reasons like this that analysts have a 258.9p 12-month target price on the stock. That’s a 17.4% premium to its current price.
After years of lagging behind the competition, back in February, the bank announced a cost-cutting plan that will help it save billions over the next couple of years. As part of this, it’s streamlining its operations down to just five divisions.
The nearest threat is falling interest rates. As they drop, this will squeeze Barclay’s margins. What’s more, Barclays generates a good chunk of its revenue from the UK. So, ongoing economic uncertainty in the months ahead could harm its share price.
But I’m hoping over the years to come that falling rates will more widely boost investor sentiment. Plus, I can make some passive income through its 3.9% dividend yield, which will tide me over should the stock encounter some short-term volatility. Over the next three years, the firm plans to return up to £10bn to shareholders via dividends and buyback schemes.
