UK shares: an unmissable buying opportunity?
UK shares have outperformed the S&P 500 so far this year. Sadly, that’s not quite as impressive as it should be.
The US index has slumped around 12% in 2025, as Donald Trump’s tariffs have spooked investors. All the FTSE 100 has done, meanwhile, is tread water. But given the market turmoil elsewhere, that’s pretty impressive.
Despite all that, UK shares still appear attractively priced to me. The FTSE 100 trades on a price-to-earnings ratio of around 16, almost bang in line with its long-term average.
That’s roughly half the valuation of the S&P 500, which continues to hover just below 33. From a value perspective, there’s a clear gap.
Stock market value isn’t just in the averages
Plenty of blue-chip shares have taken a hit in recent months. Energy firm BP is down about 30% over 12 months. Trainer chain JD Sports Fashion has fallen 35% and mining giant Glencore has slumped by a hefty 45%.
Blaming Trump for all this would be convenient, but all three were struggling before tariff turbulence hit.
I think they will recover their losses over time, although there are no guarantees. And they’re not the only ones struggling.
DCC shares could be a recovery play
One FTSE 100 stock that’s caught my attention lately is energy company DCC (LSE: DCC). Its shares have dipped 13.5% over the past year, much of that in recent weeks.
But underneath the wobble, I see potential.
The company now trades on a low price-to-earnings ratio of just 10.5. The shares now yield more than 4%, offering a decent income stream while investors wait for sentiment to turn.
The business remains on a steady footing. In February, DCC reported a robust third-quarter performance, with solid growth in its core energy and mobility divisions.
While its technology arm struggled due to soft consumer demand, the overall picture was promising.
Yesterday (22 April), it confirmed plans to sell its healthcare division for around £1bn. This move should simplify operations and sharpen focus on its energy business, which is the better performer.
The deal is expected to bring in net cash proceeds of £945m, some of which will be returned to shareholders.
Trade wars remain a threat though. As an international business, tariffs could play havoc with DCC’s supply chains.
Although it isn’t a direct oil and gas producer, its energy division still depends on commodity-linked products. Shifts in oil prices or energy demand, especially across Europe, can affect margins and sales volumes. Warmer winters, for instance, can reduce demand for its heating fuels.
The future looks brighter
DCC has grown aggressively through acquisitions, and that strategy continues. While bolt-on deals can create value, they also carry integration risks. I still think there is an exciting opportunity here.
Forecasts aren’t exactly gospel, but the 13 analysts covering DCC currently expect a one-year share price target of just over 6,990p. That’s more than 47% above today’s 4,770p.
While investors should never rely on broker forecasts, I can’t help finding them a little encouraging.
I think DDC is well worth considering, but investors should check out the risks as well as the potential rewards.
They may find other FTSE stocks they prefer to buy today. Today’s sell-off feels like an exciting buying opportunity for patient, long-term investors.
The post UK shares: an unmissable buying opportunity? appeared first on The Motley Fool UK.
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More reading
- Why I think FTSE 100 dividend shares could build a better second income than the S&P 500
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
