Everyone loves a bargain, especially when it could deliver significant gains in the long-term.
British stocks have long struggled to match the growth of their American cousins, with the FTSE 100 growing by 45% in the past five years when compared to the S&P 500 achieving more than double this at around 97%.
But some UK shares have consistently outperformed the wider market over the past five years and delivered stronger long-term returns than the average for the FTSE 350 .
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Despite this, many of these firms are trading at steep discounts based on their historic valuations, according to analysis conducted by IG, and could possibly provide gains better than the top funds on the market.
Among these companies there are high street favourites such as Sainsbury’s and Greggs, but healthcare and engineering firms including Spire and Smiths also enter the list.
Chris Beauchamp, chief market analyst at IG, called the undervaluation a “classic case of strong performance being ignored by the wider market.”
He said: “With such a heavy focus on US tech and the hugely volatile global macro environment, UK investors may have missed some of the quiet compounders closer to home, something recently noted by BlackRock’s Larry Fink.”
Beauchamp said these firms are not bargain stocks because they are struggling but are cheap despite delivering value for investors.
With the UK government’s determination to make more Brits retail investors in British stocks by potentially reducing the cash ISA limit, now could be a good time to make the most of underpriced stocks.
Beauchamp said: “For years, UK stocks have been ignored by global investors, but that view is starting to change [...] If global capital starts to rotate back into value – the UK is well placed to benefit.”
We take a look at some of the UK’s best bargain shares and ask whether you should capitalise on the discount.
Smiths Group
Shares in Smiths Group are trading at a bargain price, according to IG.
The share price of the engineering firm is currently just 2,044p.
IG said it is low despite the group’s strong performance, with its price to earnings (P/E) ratio sitting at 23 and its share price growing by 18.9% since the beginning of 2025.
A low P/E ratio can indicate that a certain stock is undervalued, though this isn't always the case. Past performance is also not an indicator of future results.
Strong sustained growth over the past few years has meant that investors in Smiths will have seen total five year returns of 93.7%
When comparing this P/E ratio to Smiths’ five year long-term average, IG finds a 91% discount on its share price.
Sainsbury’s
Supermarket chain Sainsbury’s is one of Britain’s most-recognisable brands, but despite it being well-known in the UK, IG finds its shares are trading at a significant discount.
Shares in Sainsbury’s sit at 27.9p and the firm has a P/E ratio of 15. Its share price has grown a modest 2% since the start of 2025 while the five-year total returns for investors is at 91.8%.
Comparing the supermarket chain’s current P/E ratio to its five-year average, it emerges that there is a 64% discount on shares, says IG.
Drax Group
Drax Group may not be anywhere near as well-known as Sainsbury’s, but with shares at a bargain price of 61.6p, it shouldn’t be ignored.
The power generation business has had a rocky start to 2025, with its share price dropping by around 4.9% since the start of the year. This being said, long-term investors in the firm have enjoyed five-year total returns of a staggering 278%.
The group has a P/E ratio 4, lower than many other firms on the list, but still represents a significant discount of 60% when compared to its five-year average, according to IG.
Greggs
Founded in Newcastle in 1939, Greggs now has bakeries all across the country, allowing Brits to enjoy their famous sausage rolls and steak bakes wherever they are.
But despite strong growth for the bakery chain in the past few years, IG believes that their shares are a bargain.
Shares in Greggs sit at around £2.08, but the company's stock price has tumbled by 26.9% since the beginning of the year.
Despite a rough start to the year, its P/E ratio is 14, but when compared to its five-year average, IG believes the stock is trading at a 30% discount.
A table showing a list of the FTSE 350 companies that have outperformed the market over five years can be found below, ranked by their profit to earnings ratio discount:
# | Company | Year-to-date share price performance | 5-year total returns (share price growth + dividends) | Current P/E ratio | % change in P/E ratio versus 5-year average |
|---|---|---|---|---|---|
1 | Smiths Group | 18.90% | 93.80% | 23 | -91% |
2 | Sainsbury’s | 2.00% | 91.80% | 15 | -64% |
3 | Drax Group | -4.90% | 278.80% | 4 | -60% |
4 | Carnival | -12.60% | 78.80% | 13 | -37% |
5 | Spire Healthcare Group | -12.00% | 118.60% | 32 | -36% |
6 | 4imprint | -23.80% | 120.20% | 11 | -34% |
7 | ConvaTec Group | 23.20% | 49.20% | 39 | -32% |
8 | Greggs | -26.90% | 51.60% | 14 | -30% |
9 | Admiral Group | 26.20% | 101.80% | 15 | -25% |
10 | PPHE Hotel Group | -18% | 46.30% | 21 | -24% |
Source: IG, data accessed 16 May. Past performance is not an indicator of future results
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