Interest rates could be set to rise, bond yields are surging and fears are growing that the artificial intelligence boom may be close to bursting. Yet UK shares appear largely unfazed by the uncertainty.
So far this year, the FTSE 100 has returned 5.34 per cent, while the wider FTSE All-Share Index has gained 5.6 per cent. Some market watchers believe British equities may still have further room to run.
Laura Foll, an investment manager at Janus Henderson, is one of the more optimistic voices. Speaking at the Investor Summit 2026 in London several weeks ago, she made a persuasive case that UK shares remain unusually cheap.
Foll, who co-manages the FTSE 250 investment trust Law Debenture, estimates that the UK stock market is trading at a 35 per cent discount to global markets. Put simply, she believes British companies are exceptionally good value compared with shares in many other countries.
Investing always carries risk, and there are no guaranteed outcomes. Even so, such a sizeable valuation gap could give investors the chance to secure potentially attractive returns over the long term.
The principle is straightforward: buying shares when valuations are depressed can offer greater return potential than investing after prices have already been driven higher, as they have in the US. It is the familiar investment rule of buying low and selling high.
Could Foll simply be promoting the market in which she invests? After all, around 90 per cent of Law Debenture’s equity portfolio is allocated to UK-listed companies.
The results suggest otherwise. Foll has already delivered strong performance this year by backing undervalued British shares that have subsequently rebounded.
Laura Foll, an investment manager at Janus Henderson, believes UK shares are trading at a 35 per cent discount to other global stock markets
Foll was one of nine investment specialists who contributed to an article published at the beginning of the year examining cheap UK shares that could emerge as winners in 2026.
Her selection, motoring and cycling retailer Halfords, has performed particularly well. Its share price has climbed 73 per cent, in addition to a 6p-per-share dividend paid last month. The stock is currently priced at £2.56.
Across the eight UK-listed companies highlighted by the experts as ‘dirt cheap’ on January 11 — including oil major BP, selected by two panellists — a £1,000 investment in each stock made at the market open the following day would now show a 28 per cent gain. The original £8,000 would have grown to £10,240, before stamp duty and trading costs.
Dividends paid by all eight businesses since January 12 would help offset some of those expenses. Five of the companies have produced double-digit share price gains, while investment platform CMC Markets has led the group with an increase of almost 98 per cent. It was the choice of Tom Moore, investment director at asset manager Aberdeen.
The performance looks even stronger when compared with the wider market. An £8,000 investment split into funds tracking the FTSE 100 and FTSE All-Share would now be worth £8,427 and £8,448 respectively. By comparison, the stock picks from the panel have clearly outpaced both benchmarks.
Most of the experts remain confident that their original January selections have more potential, with their latest views outlined below. Reflecting Foll’s belief that UK shares are still undervalued, they have also identified 11 additional companies whose prices appear appealing.
These names should not be treated as formal investment recommendations or share tips. They are simply companies that may interest investors looking for value. Every stock except mining group Amaroq currently pays a dividend.
1. GAMES WORKSHOP (FTSE 100)
Ben Kumar of Seven Investment Management calls Games Workshop a ‘brilliant business’ and expects its lacklustre share price performance to reverse. The stock is down almost 7 per cent so far this year.
Professional analysts appear to share that confidence, with the majority rating Games Workshop a buy or strong buy, according to figures compiled by Hargreaves Lansdown.
Games Workshop designs and produces miniature war-game products, selling them through its own shops, independent retailers and online channels. Kumar believes the company could benefit as more parents encourage children to enjoy ‘real-world experiences rather than virtual ones via their smartphone’.
The shares currently trade at £172, but analysts forecast that they could reach £220.75 within the next year. Games Workshop pays dividends every quarter, producing an annual yield of 1.9 per cent.
Games Workshop is a UK manufacturer of miniature war games, such as Warhammer, which are sold through its stores, independent outlets and online
2. LAND SECURITIES GROUP (FTSE 100)
This company owns a portfolio of prime retail and office properties in the UK and earns its revenues from tenants. Part of this cash flow is then passed on to shareholders by way of dividends.
Although the threat of higher interest rates does not favour commercial property companies – it increases their borrowing costs – Janus Henderson’s Foll says Land Securities is in a good position.
She explains: ‘Dig beneath the surface a bit and Land Securities’ business fundamentals look strong. It is benefiting from decade-high levels of occupancy and rental growth – and its borrowings are in part protected by fixed interest rates. This means its earnings are comparatively more insulated against rising borrowing costs than those of some rivals.’
Its share price is up just 2.3 per cent over the past year, but the big plus is a dividend yield of 6.6 per cent. Divis are paid twice a year.
3. LLOYDS (FTSE 100)
Although shares in Lloyds Banking Group are up 23 per cent over the past year, eToro global market strategist Lale Akoner says its market valuation still looks ‘modest’ compared to the profits it is generating.
Half-year profits for this year were £4.3billion (23 per cent up on the first half of 2025) and Akoner says profits are expected to grow strongly over the next few years.
She adds: ‘The icing on the cake is that Lloyds is expected to generate plenty of excess capital and return a significant amount of that cash to shareholders through dividends and share buybacks.’
The shares, priced at £1.04, provide a dividend yield of 3.5 per cent, with the interim divi for this year being up on last year (1.58p a share, compared to last year’s 1.22p).
Akoner says there are economic risks which could undermine the investment case for Lloyds: a sharp slowdown in the UK economy may result in an increase in borrowers struggling to repay loans, weakening its profits.
Yet she adds: ‘Investors are still being reasonably well compensated for taking that risk.’ Sixty-five per cent of analysts say Lloyds’s shares are a buy, compared to 10 per cent who think they are a sell.
4. SHELL (FTSE 100)
Despite a strong stock market performance this year, energy giant Shell is still seen by some investment experts as undervalued, especially when compared with international rivals.
Jason Hollands, managing director of Bestinvest, says shares in Shell trade at ‘undemanding valuations’ despite rocketing petrol prices.
‘Shell looks cheap relative to global peers such as US rivals ExxonMobil and Chevron,’ he adds. ‘Its shares also look good value compared to the FTSE 100 in general.’
Shell’s shares have risen by 32 per cent over the past year. In comparison, ExxonMobil and Chevron have recorded respective returns of 43 and 34 per cent.
Shell pays quarterly dividends and its shares provide a yield of around 3 per cent. Ratings collated by Hargreaves Lansdown indicate that 58 per cent of analysts say its shares are a buy: none say they are a sell.
5. COATS (FTSE 250)
Coats is the world’s largest manufacturer of industrial sewing threads and has a history dating back to 1755.
Although the business is somewhat understated, Artemis’s William Tamworth says it makes strong margins and dominates its market.
He adds: ‘Coats’s products represent a small proportion of the total costs involved in making clothing and specialist footwear components such as insoles. But they are important: poor-quality thread that keeps snapping can drive up manufacturing costs for clothing companies. The shares are attractively valued.’
Over the past year, the shares are down 1.3 per cent. They provide a yield of 3 per cent. Analysts say the share price has the potential to rise from 81p to £1.20 over the next year.
6. JOHNSON SERVICE GROUP (FTSE 250)
This company goes under the radar, but if you’ve stayed in a Premier Inn, you would have slept on its sheets – and it would have laundered them. Its business is built around laundry services and the supply – and cleaning – of workwear.
Janus Henderson’s Foll is a fan. ‘It’s a market leader and it makes good margins,’ she says. She adds that its shares are undervalued – they’re down 4.9 per cent over the past year – both on historic grounds and when compared to the broader UK stock market.
The shares provide a dividend yield of 3.5 per cent, with divis paid twice a year.
7. PERSIMMON (FTSE 250)
Although house builder Persimmon was relegated from the FTSE 100 Index last month, Interactive Investor’s Richard Hunter is convinced it will come bouncing back.
He says: ‘A sustained recovery for the group is a matter of when and not if. Alongside an undemanding valuation, Persimmon is a preferred choice in the sector.’
Hunter says Persimmon could be a big beneficiary of Labour’s proposed ‘Your First Home’ scheme which will enable wannabe homeowners to buy new-build flats with a deposit of just 2.5 per cent – with a 20 per cent equity loan, initially interest-free, provided by the Government.
This is because it builds more affordable homes than many rivals. Hunter also likes the fact that Persimmon has accumulated a land bank of some 85,000 plots which it can use if demand for new homes improves.
In addition, he says its decision to manufacture its own bricks, tiles and timber frames is a smart one, saving itself £6,000 per building plot.
Persimmon’s shares are down 7.6 per cent over the past year. Priced at £12.11, they provide a dividend yield of 4.6 per cent with divis paid half-yearly. For the past two years, annual dividends have totalled 60p a share.
House builder Persimmon decided to manufacture its own bricks, tiles and timber frames, which helps it save £6,000 per building plot
8. RIGHTMOVE (FTSE 250)
Shares in property website Rightmove have taken a hammering over the past year as a result of fears that Artificial Intelligence could disrupt its business model. They’ve fallen 36 per cent: 12 per cent over the year to date.
Yet Tom Moore, manager of investment trust Aberdeen Equity Income, believes the shares offer ‘significant upside’.
The trust bought shares in Rightmove in August, having last held the stock ten years ago. Moore says the company is ‘supremely positioned as the UK’s leading property portal with the highest brand awareness and strong customer engagement’.
He says: ‘Rightmove’s earnings have more than doubled over the past ten years, yet the share price has fallen, creating a great investment opportunity.’
Moore draws comfort from the fact that when Rightmove was unsuccessfully bid for by Rupert Murdoch’s REA Group in 2024, its shares were valued at around £7.75 – 74 per cent higher than the current share price. Yet earnings for the current financial year ending December 31 are 25 per cent higher than they were in 2024.
Rightmove pays dividends twice a year.
9. SAFESTORE (FTSE 250)
Self-storage company Safestore has seen its shares fall by 26 per cent this year in response to lowering its earnings outlook.
Yet Artemis’s William Tamworth believes there is scope for ‘significant earnings growth’ if the UK economy improves and house-moving activity picks up. ‘This could make a big impact on profitability,’ he adds.
The shares provide an attractive income, equivalent to a dividend yield of 6.1 per cent.
10. WPP (FTSE 100)
Temple Bar Investment Trust manager Ian Lance believes advertising company WPP has the potential to make shareholders a lot of money if newish boss Cindy Rose can turn around the company’s fortunes.
During the pandemic, shares in the company troughed at £5.50 before recovering to £12 in 2022. Today they stand at £3.74, but Lance says that if the company can stabilise its earnings the shares could head north of £5.
Key to this is a restructuring of the company which Rose has begun, bringing together businesses under the WPP umbrella and reducing costs.
Lance says: ‘Global competitors such as Publicis Groupe and Omnicom are growing their revenues which suggests the advertising industry is not in structural decline. WPP’s issues are of its own making. If Rose can fix them and stabilise – even grow – earnings per share, the upside could be significant.’
WPP is Temple Bar’s biggest holding and provides investors with a 4 per cent dividend yield.
Over the past year, the shares are up 0.9 per cent.
11. AMAROQ (FTSE ALL-SHARE)
You may not have heard of this company but Amaroq is a mining company with operations based in Greenland. It mines minerals – copper, gold and germanium – which are much in demand by businesses involved in the manufacture of semi-conductors, electric cars, solar panels and fibre optics.
Ben Kumar of 7IM says Amaroq ‘could be the main company that benefits from increasing demand for Greenland’s rich vein of minerals’.
One of the main reasons for Donald Trump’s heightened interest in Greenland is the minerals. The recent US agreement with Denmark and Greenland was focused on military issues, but there is no doubt the US has one eye on the mineral wealth to be found under the Arctic.
Amaroq’s main operations are based around the gold mine at Nalunaq, but drilling for gold and iron has commenced at Nanoq and Minturn.
Revenues jumped in the first half of this year, from $3.4million Canadian dollars to $56.2million. Its shares have also just listed on the main London Stock Exchange, having previously been on AIM.
Kumar describes this stock pick as a ‘punt’ as opposed to his other choice (Games Workshop), which he describes as a ‘longer-term investment’. Amaroq does not pay a dividend.
Is it still worth investing in our picks from January?
How our eight January 2026 picks have done
1. CMC MARKETS: UP 98%
Divis (date paid): 8.3p (14/8)
Verdict: ‘We remain excited about CMC. The quality of its business is far higher than the market perceives.’ (Moore, Aberdeen Equity Income)
2. HALFORDS: UP 73%
Divis: 6p (15/9)
Verdict: ‘Its valuation is not stretched but it’s not as clear a valuation case as it was in January.’ (Foll, Janus Henderson)
3. BP: UP 32%
Divis: 6.41p (18/9)
Verdict: ‘I still think there is a lot of really interesting upside in the share price.’ (Kumar, 7IM)
‘We still believe there is significant upside in BP’s share price.’ (Lance, Temple Bar)
4. MOONPIG: UP 28%
Divis: 5p (19/11)
Verdict: ‘It still looks attractive, especially if the company can deliver the double-digit growth it is targeting.’ (Tamworth, Artemis)
5. VODAFONE: UP 26%
Divis: 2.01p (30/7)
Verdict: ‘Vodafone is not as dirt cheap as it was, but the value story is not exhausted.’ (Akoner, eToro)
Lale Akoner from eToro says Vodafone is not as dirt cheap as it was, but the value story is not exhausted
6. RIO TINTO: UP 17%
Divis: £1.57 (24/9)
Verdict: ‘Continues to offer good medium to long-term potential.’ (Hollands, Bestinvest)
7. DIAGEO: DOWN 2%
Divis: 14.94p (4/6)
Verdict: ‘Its results in August were well received, with its new strategy met with high excitement by investors.’ (Hunter, Interactive Investor)
8. GB GROUP: DOWN 41%
Divis: 4.4p (7/7)
Verdict: ‘It announced the loss of five big American customers in July, prompting a cut to earnings. We still hold the stock.’ (Tamworth, Artemis)
Note: Share gains from January 12 to October 5, 2026
