Best of British bargains: cash in on undervalued companies in the UK stock market
Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money

UK equity markets are in a decent position as we move through 2025. Our bottom-up analysis points to upside of around 6% from today’s level for the FTSE, which makes the UK market attractive relative to both the rest of Europe and the US.
Granted, the macroeconomic environment remains uncertain: growth forecasts by the Bank of England for 2025 were halved recently.
On top of this, inflation is rising once again, and of course, we have the potential for disruption caused by US trade tariffs. All that said, we still see plenty of attractive stock opportunities in the UK.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Firm foundations
We believe that Persimmon (LSE: PSN), Britain’s second-largest homebuilder, is a great way to play the structural mismatch between supply and demand in the UK housing market.
The stock has lost two-thirds of its value since its peak four years ago. Rising interest rates and consumers’ stretched wallets contributed to its decline, but we think supportive conditions have already arrived, and the company has turned a corner.
Demand from homebuyers is picking up as interest rates in the UK fall and home ownership becomes more affordable. The new Labour government has introduced policies that are highly supportive of the homebuilders, which should be conducive to increased building in the medium term.
Over the longer term, demographics, including longer life expectancy, play a supportive role. In the meantime, investors can benefit from a dividend yield in excess of 5%.
BP is a good bet
Oil giant BP (LSE: BP) is finally adjusting its strategy and increasing investment in traditional oil and gas projects. It is also reducing the speed at which it hopes to transition to clean energy.
That is bad news for environmentalists, but the move should create more value for shareholders in the medium term.
The company is also reducing structural costs and pivoting towards higher-margin projects, which should lead to higher profitability in the future.
Our estimate of the stock’s fair value is 20% above the current price, while a dividend yield of nearly 6% means investors can get paid to wait for the share price to appreciate. Add to this the potential for BP to be taken over, as per the current speculation in media quarters, and BP is a good bet for investors.
Poised for recovery
The luxury sector has taken a beating over the last couple of years, and Burberry Group (LSE: BRBY) has not been spared. The pandemic-induced appetite for luxury goods shopping has ended, and demand from Chinese consumers in particular has dissipated, but we see a lot of value in brands such as Burberry.
We believe that the luxury-goods market is cyclical and see the current malaise as part of a downturn rather than a permanent demise. We think that Burberry, a leading luxury-goods maker, can help itself to a large degree through cutting back on capital expenditure, which should improve cash flows.
In the medium-term, we believe the group will eventually benefit from a rebound in demand for luxury goods. The shares could go up by as much as a third.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Chief Equity Market Strategist, EMEA, Morningstar
-
It’s time to start backing Britain – the best investments to buy now
The UK stock market has been languishing for decades. But the tide is turning and smart investors should buy in now
-
Global equities that should prove resilient to the stock market’s storms
Opinion Alex Illingworth of Goshawk Asset Management highlights three diverse opportunities in global equities despite a turbulent landscape
-
FRP Advisory Group – a bargain in a booming market
FRP Advisory Group's past and future growth isn’t reflected in the company’s valuation
-
European funds: investors have 'a luxury of choice'
A series of mergers is bringing consolidation among European funds, but investors should benefit, says Max King
-
US stocks are more expensive than ever after Trump's tariffs
We don’t need to second-guess the effect of Trump's tariffs to think that the rest of the world offers better value
-
Filtronic: a UK success story cashing in on the space race
Filtronic has become an all-too-rare Aim success story since it moved down to the junior market
-
How to use SAYE and SIP schemes to multiply your money
Employers’ savings or share-incentive plans like SAYE and SIP schemes can help top up your pension
-
Sizzling sales at Sysco – should you invest in this US food supplier?
The American food distribution group Sysco is expanding rapidly worldwide and is still reasonably valued