Compared to stocks in the US, companies have been trading on lower valuations for some considerable time. However, that situation may change if the UK economy starts to outperform in the months and years ahead. Already, foreign companies and investment institutions have been piling into UK stocks — either buying up companies completely or taking big chunks of their shares.
To outsiders, the values on offer look compelling. But here in the UK, many investors have probably become complacent because shares have looked cheap for so long. It’s time to wake up though! A successful turnaround The most likely process for to rate higher is for share prices to rise.
Another way is for company earnings to fall. But I reckon that’s unlikely in the coming years unless we see more unexpected black-swan events that crash the economy. Personally, I’m not hanging around, and my watchlist is filling up with FTSE 100 bargains.
For example, I’m keen on fashion, homewares and food retail giant ( ). After years of struggle and decline, the business is finally turning around under its dedicated and inspirational chief executive Stuart Machin. I see this as a stock to consider buying and holding for at least five years, and probably a lot longer than that.
However, it’s a retail business, so there are risks. Perhaps the biggest is that the sector’s cyclical. If we see another general economic downturn, it would be easy to lose money on the shares.
A cash-cow business with options But I.
