UK shares had a great 2025 with the FTSE 100 delivering a total return of 25.8%, its fifth-best result since it was launched in 1984. But the index is still home to plenty of bargains. Here are some of the cheapest.
A popular method to find cheap shares is to look at a stock’s price-to-earnings (P/E) ratio. As the name suggests, it measures a company’s share price relative to its earnings per share. In theory, the lower the number, the cheaper the stock.
Applying this methodology, the biggest bargain on the Footise at the moment (30 January) is 3i Group. It has a trailing 12-months P/E ratio of 6.5.
But this is potentially misleading. That’s because 3i’s an investment company. Its purpose is to increase the value of the businesses in which it has a stake. As it’s not a trading group, its earnings multiple is largely irrelevant.
Trainers and tracksuits
However, I think the performance measure is a good guide for JD Sports Fashion (LSE:JD.). Its P/E ratio of 6.7 is the FTSE 100’s second-lowest. And I believe it reflects concerns about its lack of sales growth. The self-styled ‘King of Trainers’ has improved its top line by acquiring businesses in the US and Europe but it’s been struggling to sell more from its existing footprint.
It’s also suffered from a lack of product innovation by Nike, which has seen its share price suffer in recent months. It’s estimated that the American sportswear giant accounts for around half of the British retailer’s sales. That’s why their share prices tend to closely mirror one another.
But taking all this into account, I still think JD Sports is worth considering. It has a healthy balance sheet and strong free cash flow. It doesn’t plan to buy anything else at the moment so that should leave plenty of cash to help refresh existing stores. This year’s football World Cup should also boost summer sales. And the group’s clever enough to know not to put all of its eggs in the Nike basket.
Flying high
With a P/E ratio of 7.1, the next cheapest stock on the list is easyJet (LSE:EZJ). Although multiples in the airline industry tend to be lower than most, this is low by recent standards for both easyJet itself and others.
Despite its share price being stuck over the past six months, the group continues to increase capacity and its package holidays business is doing particularly well. The group’s operating profit for the year ended 30 September 2025 was 5% higher than analysts were expecting.
But running an airline isn’t easy. Fuel costs are largely beyond easyJet’s control and there are numerous other financial, operational, and environmental challenges that the group faces. Competition’s also fierce.
However, the airline looks in good shape to me. Its balance sheet remains healthy and it retains an instantly-recognisable brand. And after being suspended during the pandemic, its dividend’s been steadily increased and is now only slightly below the index average.
Final thoughts
Although imperfect, the P/E ratio’s a fairly quick way of assessing the relative valuations of individual stocks. And by doing a little bit of number crunching, it’s possible to find plenty more opportunities that are, on paper at least, a bit of a bargain and therefore worthy of further investigation.
