In this article, we will look at the 11 Best Undervalued UK Stocks to Buy Right Now.

The UK and Europe’s Performance in Q1 2025

The global markets entered 2025 in the hope that the bullish run of the fourth quarter will continue in the first quarter of 2025. However, the uncertainty due to the tariffs led to the reversal of all gains made in the fourth quarter leading to a loss of 4.5%. However, on the positive side, the UK and the European market saw some excellent returns during the first quarter of 2025. Rory McPherson, the Chief Market Strategist of Wren Sterling, noted that the first quarter of 2025 was the best quarterly return quarter for the UK market since 2022. For the European market, it was their best quarterly return in over a year.

The performance of the UK and the European markets was based on several factors. Firstly, for Europe, the approval of a 500 billion Euro infrastructure fund and the lifting of restrictions on defense spending in Germany helped take the overall European market higher. This was also backed by the continued stimulus from the Chinese government to help fire up the engines of China and Germany. On the other hand, the UK market mainly benefitted from the better-than-expected corporate earnings, particularly from the banking sector. The UK’s banking sector reaped the advantage of its diversification, followed by its cheaper valuations, and increased profitability. As per Wern Sterling’s report, the UK banking sector grew its earnings by 30% year-over-year during the first quarter of 2025, which was similar to the growth of the Magnificent Seven in the United States. On top of this, the sector benefited from its extremely cheap valuation as compared to the top US stocks. The report also highlighted that the UK’s banking sector is using its excess cash to buy back stocks and increase dividends which makes it even more lucrative for shareholders.

How Will Tariffs Impact the UK’s growth

On April 24, Andrew Bailey, Bank of England governor, joined CNBC to talk about the impact of tariffs on the UK’s economy. He segregates the impact of tariffs into two portions, which are the impact on growth and the impact on inflation. He said that unfortunately, if we talk about the impact on growth, tariffs will have an impact in the longer run due to the closed nature of the global economy. Bailey elaborated that if we reduce the trade and openness of the global economy it directly impacts the growth trajectory of the economy. On top of this, there is the uncertainty effect which has led CEOs and consumers alike to postpone investment decisions. He noted that the UK already has a high saving rate, which shows that the people are simply uncertain about the economic and policy conditions that are restricting them from making investment decisions.

In terms of the inflationary impact, Bailey remains confident that the tariffs are not having an inflationary impact. He explains that inflation factors in a lot of other indicators, for instance, if trade with the United States is restricted the economy can redirect its exports to other markets. On the other hand, retaliation from the UK government could also lead to a deflationary impact.

To conclude, Bailey is more concerned about the impact of tariffs on growth as compared to inflation. He noted that the UK administration not only needs to address the supply and demand side issues related to growth but also has to tackle the trade issues with effective policies.

With that let’s take a look at the 11 best undervalued UK stocks to buy right now.

Our Methodology

To curate the list of the 11 best undervalued UK stocks to buy right now, we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance as our sources. Using the screener we aggregated a list of UK stocks that are trading below the Fwd P/E of 15. Next, we cross-checked the Fwd P/E of each stock from Seeking Alpha and earnings growth from Yahoo Finance. Finally, we ranked these stocks in ascending order of the number of hedge funds that hold stakes in them, as of Q4 2024. Please note that the forward P/E data was collected on April 23, 2025.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

11 Best Undervalued UK Stocks to Buy Right Now

11. Prudential plc (NYSE:PUK)

Forward P/E Ratio: 10.47

Number of Hedge Fund Holders: 10

Prudential plc (NYSE:PUK) is a multinational health insurance and asset management company based in the United Kingdom. The company has operations in 24 countries across Africa and Asia. It uses a multi-channel distribution network that includes 63,000 active agents and over 200 bank partners to operate around the globe. Moreover, Prudential plc (NYSE:PUK) has also invested in digital platforms such as PRUServices and PRUForce that allow it to leverage artificial intelligence and data analytics to enhance customer experience.

On March 20, the company announced its joint venture with HCL group in India to address the growing need for health insurance in the country. Subject to approval, the company will hold a 70% stake in the joint venture while the HCL group will hold a 30% stake. Moreover, during fiscal 2024, Prudential plc (NYSE:PUK) reported growing its new business profit by 11% year-over-year, which was in line with its guidance of $3.1 billion. Management believes that 2025 will be the inflection point for growth in its free surplus, which came in at $2.6 billion during the year and was in line with expectations.

Lastly, on April 23, Barclays analyst Larissa Van Deventer maintained a Buy rating on the stock with a price target of £11.3. Prudential plc (NYSE:PUK) is one of the best undervalued UK stocks to buy right now.

10. Carnival Corporation & plc (NYSE:CUK)

Forward P/E Ratio: 9.02

Number of Hedge Fund Holders: 14

Carnival Corporation & plc (NYSE:CUK) is a global cruise company that operates through various cruise brands and other travel-related services. The company has a fleet of more than 90 ships spanning across 9 major cruise brands.

The company during its fiscal first quarter of 2025 announced launching new marketing campaigns across major brands to broaden the appeal of cruise travel. In addition, the company is also enhancing its exclusive cruise destinations such as Celebration Key in the Caribbean Relax Away at Half Moon Cay.

Moreover, on top of the strategic developments, Carnival Corporation & plc (NYSE:CUK) achieved record first-quarter results; it witnessed a robust yield growth of 7.3%, which surpassed guidance. The revenue grew over $400 million year-over-year to reach a record high of $5.8 billion. Management has raised the earnings guidance for the year by $185 million. The company ranks as one of the best undervalued UK stocks to buy right now.