2025 was a remarkable year for FTSE shares. In fact, the UK’s flagship FTSE 100 index delivered a jaw-dropping 26.8% total gain. And even in 2026, following a recent pullback, the index still continues to march higher.
But does this new momentum now mean time’s running out for investors to snap up cheap UK stocks?
What’s going on with FTSE shares?
There are a lot of factors behind the FTSE 100’s massive outperformance last year. But one of the biggest drivers is something called capital migration. With US stock valuations reaching record highs and uncertainty creeping into the American economy, investors worldwide have begun rebalancing their portfolios. And a lot of this capital has started moving into other markets, including the UK.
That isn’t surprising given the enormous discount that UK shares trade at versus international peers. For reference, the average earnings multiple for a FTSE 100 stock is around 15. In the US, it’s currently closer to 25.
With more uncertainty now creeping into the US stock market on the back of AI disruption fears and surging global oil & gas prices, this capital migration could continue. And that means 2026 could be another gangbuster year of growth for FTSE shares.
Is time running out?
Capital migration creates a powerful tailwind for the UK stock market. But it’s important to highlight that the persistent discount in valuations isn’t random. It’s driven by a similarly persistent economic growth and productivity problem – something that successive governments have failed to solve.
The good news for investors is that this also means there are and likely will still be plenty of bargain-buying opportunities to capitalise on for many years to come. And even in the UK market, investors who identify these opportunities ahead of the crowd can go on to enjoy impressive returns.
So which stocks should investors be looking at today?
A top value pick?
According to the team of expert analysts at Peel Hunt, Domino’s Pizza Group (LSE:DOM) could be one of the most misunderstood FTSE shares on the market today. It’s a highly cash-generative franchise business that’s been serially re-rated downwards, despite taking market share thanks to a structurally sound business model.
The company generated £80.7m of free cash flow in 2025, enabling management to continue expanding its franchise empire as well as simultaneously investing in its industry-leading technology infrastructure. Instead, its competitors have been busy closing stores.
Despite this, Domino’s shares are trading at their lowest point in over a decade. Yet some caution’s justified.
Stagnant top-line growth alongside continuously rising cost pressures, courtesy of food and wage inflation, is putting a lot of pressure on the bottom line. And this impact is only being compounded by the weakness in UK consumer spending.
But looking at the Domino’s share price, this FTSE stock’s seemingly been repriced as if these problems are structural when, in reality, they appear to be cyclical. Peel Hunt has come to a similar conclusion, issuing a 275p share price target – almost 60% higher than where the stock trades today.
There’s no denying the near-term earnings picture’s cloudy. But looking out to the longer term, Domino’s highly cash generative business model perfectly positions the company for a potentially impressive rally once consumer spending starts to bounce back. It’s worth a closer look.
