With the first week of June now almost over, we are racing towards the halfway point of 2025. So far, it has been a dramatic year in the stock market – and there could be more of that to come. So, ought investors simply to sit tight and do nothing? Or could this be a great year to buy UK shares?
The FTSE 100 index of leading shares has hit a new all-time high and it is within spitting distance of that level again now. But 2025 has also seen a lot of volatility in stock markets on both sides of the Atlantic.
Here’s why I see opportunities
My approach has been to buy. I think there are some great opportunities in the market at the moment and I have been trying to seize them.
But given how well the FTSE 100 has been doing lately, why do I think this way?
One reason is that I reckon UK shares have been undervalued for years and remain so, even though the index has had some very good moments so far this year.
Another key reason is that I am not buying the index, but am instead investing in individual shares. While the FTSE 100 may have hit some high notes in 2025, that does not mean all of the 100 shares that make it up have been doing as well. Far from it.
By buying shares in great UK businesses at what I see as attractive prices then holding them for the long term, I aim to build wealth.
Looking for bargains this June
As an example, consider one of the UK shares that has long been on my watchlist: Spirax Group (LSE: SPX).
The specialist engineer is not a household name, for sure. But it has built a very impressive business, growing its dividend annually for over half a century.
The thing it, lots of investors besides me clearly like the company too. So its share price has long been too high for me.
I see why people would like Spirax as a share to own. It has a proven business model, large customer base and sells critical components for industrial processes so even if the economy sours I expect many orders will keep coming in.
There are risks to the company – weak demand in China is one and tariff uncertainty another given the company’s international footprint. But I think a key reason the Spirax share price has tumbled – it is down 36% over the past year – is that the share had long been valued at too high a level.
So, am I now ready to buy? Not yet. Even after the fall, the Spirax share price-to-earnings ratio of 22 is a bit high for my taste. But it is getting much closer to what I see as a reasonable valuation, at which point I will be happy to add it to my portfolio.
