In this article, we will look at the 13 Best Undervalued UK Stocks to Invest In.
On February 27, Ben Ritchie and Rebecca Maclean, investment managers at Dunedin Income Growth Investment Trust PLC, shared their market insights regarding the UK’s previous and future market performance. The managers noted that 2025 was a strong rebound year for the UK, as the FTSE All-Share Index posted its best gains in over a decade. This performance signals an uptick in investor confidence after years of underperformance. However, the gains in the UK were not broad-based and were restricted to a handful of companies, similar to those in the US, Asia, and other emerging markets.
In the UK, the banking sector delivered 32% of the total returns, while HSBC alone contributed 14%. Defense stocks were also among the gainers, driven by the ongoing geopolitical tensions. The broader theme for 2025 was that the large-cap companies outperformed small and mid-cap stocks significantly. Ben Ritchie and Rebecca Maclean noted that top performers from 2025 are not expected to repeat their performance and that the narrow leadership has created valuation anomalies. This suggests that a sector rotation is emerging, which is expected to favor selective stocks rather than picking previous winners.
With that, let’s take a look at the 13 Best Undervalued UK Stocks to Invest In.
Our Methodology
We used screeners to identify UK stocks that are trading below a forward P/E of 15, and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
13 Best Undervalued UK Stocks to Invest In
13. Shell plc (NYSE:SHEL)
Shell plc (NYSE:SHEL) is one of the Best Undervalued UK Stocks to Invest In. On February 26, JPMorgan analyst Matthew Lofting raised the price target on Shell plc (NYSE:SHEL) from 3,200 GBp to 3,400 GBp, while maintaining a Buy rating. On the same day, Berenberg also raised the price target from 3,250 GBp to 3,300 GBp and maintained a Buy rating on the stock.
Wall Street has a bullish sentiment on the stock despite the company missing earnings estimates on February 5. During fiscal Q4 2025, the company posted $64.09 billion in revenue, reflecting 3.3% decline year-over-year and short of expectations by $1.72 billion. The EPS of $1.14 also fell short of the consensus by $0.15.
Management noted that the quarterly performance was impacted by noncash tax impacts and lower oil prices. The challenges were slightly offset by strong operational performance as the company delivered $3.3 billion in adjusted earnings. This was driven by strong upstream earnings of $1.57 billion. Notably, Cash Flow from Operations remained robust at $9.4 billion despite some typical year-end payments. Management highlighted that the CapEx range for 2026 remains at $20 billion to $22 billion, with the aim of maintaining a strong balance sheet.
Headquartered in London, Shell plc (NYSE:SHEL) produces oil and natural gas. The company’s operations are divided into the following segments: Integrated Gas, Upstream, Marketing, Chemicals and Products, Renewables and Energy Solutions, and Corporate.
12. British American Tobacco p.l.c. (NYSE:BTI)
British American Tobacco p.l.c. (NYSE:BTI) is one of the Best Undervalued UK Stocks to Invest In. On February 24, Faham Baig from UBS reiterated a Buy rating on the stock with a price target of £52. On the same day, James Edwardes Jones from RBC Capital maintained a Sell rating on the stock with a price target of £36.
The mixed outlook comes as the company reaffirmed its fiscal 2026 guidance on February 18. British American Tobacco p.l.c. (NYSE:BTI) expects fiscal 2026 revenue growth towards the lower-end of 3% to 5% range, along with adjusted profits in the range of 4% to 6% growth.
Earlier on February 12, the company released its preliminary results for the year ended December 31, 2025. The company added 4.7 million consumers to its smokeless brands to reach 34.1 million consumers. Smokeless products now account for 18.2% of group revenue, up 70 basis points from fiscal 2024. Management noted that this is driven by strong US performance, with Velo Plus achieving triple-digit revenue growth. Moreover, the reported group revenue fell 1.0% to £25,610 million due to a 3.1% currency headwind, but grew 2.1% at constant FX, fueled by combustibles in the US and Americas/Middle East, and Velo Plus.
British American Tobacco p.l.c. (NYSE:BTI) is a global consumer‑goods company that manufactures and sells tobacco and nicotine products across multiple categories and geographies.
11. Barclays PLC (NYSE:BCS)
Barclays PLC (NYSE:BCS) is one of the Best Undervalued UK Stocks to Invest In. On February 19, UBS analyst Jason Napier maintained a Buy rating on the stock with a price target of 580 GBp. Earlier, on February 13, RBC Capital analyst Benjamin Toms raised the price target on the stock from 525 GBp to 550 GBp.
The ratings follow the company’s full-year 2025 results, released on February 10. Management noted that they met or exceeded guidance across all metrics. The company’s RoTE reached 11.3%, up from 10.5% in 2024, driven by double-digit RoTE across all divisions. The EPS grew by 22% to 43.8p, and TNAV per share grew 15% to 409p. This marked 10 straight quarters of gains. Moreover, profit before tax rose 13%, reflecting broad-based strength.
The company returned £3.7 billion to the shareholders, 23% more than in 2024. This includes a £1.2bn dividend and £2.5bn in buybacks. Notably, Barclays PLC (NYSE:BCS)’s Net Interest Income for fiscal 2025 reached £12.8 billion, while Barclays UK NII reached £7.7 billion, topping expectations of £12.6 billion and £7.6 billion, respectively.
Looking ahead, Barclays PLC (NYSE:BCS) announced financial targets for 2026 and 2028. The company aims to achieve a RoTE of over 12% by 2026 and over 14% by 2028. Moreover, management expects to generate a group income of £31 billion in 2026 and aims to achieve a more than 5% income compound annual growth rate from 2025 to 2028.
Barclays PLC (NYSE:BCS) is a diversified global bank operating through five main divisions: Barclays UK, Barclays UK Corporate Bank, Barclays Private Bank and Wealth Management, Barclays Investment Bank, and Barclays US Consumer Bank.
10. NatWest Group plc (NYSE:NWG)
NatWest Group plc (NYSE:NWG) is one of the Best Undervalued UK Stocks to Invest In. On February 23, NatWest Group plc (NYSE:NWG) announced the hiring of Ruari Phillips as Head of Venture & Growth Finance. The bank is expanding into specialized banking for high-growth startups and scale-ups through a new unit called NatWest Venture Banking, set to launch in April 2026.
The Head of Venture & Growth Finance is a key leadership role to enhance the bank’s ability to provide venture debt and tailored financial support. Previously, Ruari Phillips was serving as Head of Strategic Capital at HSBC, where he led venture debt teams for companies at all growth stages. Phillips brings more than 13 years of experience from HSBC UK, Silicon Valley Bank, and Barclays. Management highlighted that he holds unique experience in complex debt deals, portfolio management, and helping firms from seed to exit.
Phillips will report to Jenny Edwards, Head of NatWest Venture Banking, and will also collaborate with Greg Brown and Kim Martin to deepen ties with venture capital and provide holistic support.
NatWest Group (NYSE:NWG), together with its subsidiaries, provides banking and financial products and services in the UK and internationally. It operates through the Retail Banking, Private Banking, and Commercial & Institutional segments.
9. Janus Henderson Group plc (NYSE:JHG)
Janus Henderson Group plc (NYSE:JHG) is one of the Best Undervalued UK Stocks to Invest In. On February 19, Janus Henderson Group plc (NYSE:JHG) launched the Janus Henderson AA‑A CLO ETF, which is an actively managed ETF that gives investors exposure to investment‑grade collateralized loan obligations.
Management noted that this launch is part of the company’s move into securitized credit. The company also plans to expand its CLO ETF while anchoring its flagship JAAA and JBBB products. The fund has already secured $100 million in seed capital from The Guardian Life Insurance Company of America. This funding is based on Janus Henderson’s earlier strategic partnership with Guardian.
The fund will be focused on high-quality AA to A-rated CLOs, which are senior‑tranche structures backed by leveraged loans. Moreover, management plans to position it between JAAA and JBBB, meaning that the fund will have a higher yield than AAA, but lower risk and volatility than BBB‑rated CLOs. The fund is said to be managed by Portfolio Managers John Kerschner, CFA, and Nick Childs, CFA.
Janus Henderson Group plc (NYSE:JHG) is a British-American global asset management firm headquartered in the City of London. It provides investment products to individual investors, financial advisors, and institutions worldwide under the Janus Henderson Investors brand.
8. WPP Plc (NYSE:WPP)
WPP Plc (NYSE:WPP) is one of the Best Undervalued UK Stocks to Invest In. On February 26, WPP Plc (NYSE:WPP) announced its multi-year strategic plan and 2025 preliminary results. The strategic plan aims at restoring growth and driving long-term value for its clients and shareholders.
Management noted that they are transitioning from their old holding company model to deliver seamless, AI-powered services to clients through four streamlined units, including WPP Media, WPP Creative, WPP Production, and WPP Enterprise Solutions. These units will operate across North America, Latin America, EMEA, and APAC regions.
The Elevate28 is based on four main pillars that include superior client growth, superior operations with a simplified model, harnessing the advantage of WPP Open, and creating a financial foundation by unlocking £500m in annual cost savings by 2028.
As part of this strategy, fiscal 2026 is defined as a stabilizing year, where management plans to prioritize and stabilize new business wins, cut costs, and execute asset sales. 2027 is planned to be the “building” year, where the company aims to roll out an integrated sales model and targets a return to organic revenue growth. The year 2028 and beyond are defined as “Scale up” years with the aim of becoming a lean AI-driven leader with faster growth, higher margins, and strong cash flow.
WPP Plc (NYSE:WPP) is a UK-based creative transformation company that serves national and multinational clients with communications, experience, commerce, and technology services. Headquartered in London, it operates as the world’s largest advertising holding company, owning networks in advertising, PR, media, and market research, like Ogilvy, VML, GroupM, and Burson.
7. Marex Group plc (NASDAQ:MRX)
Marex Group plc (NASDAQ:MRX) is one of the Best Undervalued UK Stocks to Invest In. On February 6, Marex Group plc (NASDAQ:MRX) announced the acquisition of Webb Traders, which is a European market maker in equity derivatives.
Management noted that this acquisition is aimed at boosting the company’s capabilities in trading and pricing options tied to stocks. Webb Traders operates from Amsterdam and Paris. The company focuses on market making for single-stock options on mid and large-cap equities in Europe and the US. The company said that the addition of Webb Traders brings a team of traders, quants, and developers. Moreover, the risk management style of Webb Traders also matches Marex’s conservative approach.
The strategic acquisition is expected to strengthen Marex’s “Equity Linked Structured Products” platform and enable internalizing hedging, allowing the company to handle risk-offsetting trades in-house instead of outsourcing. The deal is expected to close in the second half of fiscal 2026.
Marex Group plc (NASDAQ:MRX) provides liquidity, market access, and infrastructure services to clients in energy, commodities, and financial markets.
6. IHS Holding Limited (NYSE:IHS)
IHS Holding Limited (NYSE:IHS) is one of the Best Undervalued UK Stocks to Invest In. On February 17, IHS Holding Limited (NYSE:IHS) announced entering a merger agreement with MTN Group Limited. As a result, the company will be acquired by MTN for $8.50 per ordinary share, in an all-cash transaction valued at roughly $6.2 billion.
Management noted that the deal offers strong value to shareholders as it represents a 239% premium over the share price at the time of its strategic review on March 12, 2024. The deal also presents a 36% premium to the 52-week volume-weighted average price as of February 4, 2026, and a 3% premium to the unaffected closing price of $8.23 on that date.
Sam Darwish, Chairman & CEO, IHS Towers, highlighted that the transaction provides shareholders with immediate cash during a time of market and geopolitical challenges in the company’s main operating regions.
The deal has been fully approved by IHS Holding Limited (NYSE:IHS)’s Board of Directors, and the Board has recommended that shareholders vote in favor of the deal. The transaction is expected to be closed in 2026.
IHS Holding Limited (NYSE:IHS) owns, operates, and develops shared communications infrastructure, primarily towers, in emerging markets like Brazil, Nigeria, South Africa, and others.
5. Brightstar Lottery PLC (NYSE:BRSL)
Brightstar Lottery PLC (NYSE:BRSL) is one of the Best Undervalued UK Stocks to Invest In. On February 24, Brightstar Lottery PLC (NYSE:BRSL) announced fiscal Q4 2025 results. The company grew its revenue by 2.61% year-over-year to $668 million, and topped expectations by $4.57 million. The EPS of $0.36 also topped estimates by $0.04.
Vince Sadusky, CEO of Brightstar, noted the quarter to be “better-than-expected” in terms of revenue and profit growth. The performance was driven by a 3.5% year-over-year increase in same-store sales. The revenue growth was led by increased US multistate jackpot activity and strong iLottery performance. The adjusted EBITDA for the quarter grew by 5% year-over-year to $304 million, driven by strong flow-through from US jackpots, but was partially offset by UK contract transition costs.
Looking ahead, management expects fiscal 2026 revenue in the range of $2.50 billion – $2.55 billion, while the adjusted EBITDA is anticipated in the range of $1.16 billion – $1.19 billion.
Brightstar Lottery PLC (NYSE:BRSL) is a pure-play global lottery company focused on end-to-end solutions. It provides lottery management services, instant lottery systems, land-based operations, and iLottery platforms, including point-of-sale machines linked to centralized processing.
4. Nomad Foods Limited (NYSE:NOMD)
Nomad Foods Limited (NYSE:NOMD) is one of the Best Undervalued UK Stocks to Invest In. The share price of Nomad Foods Limited (NYSE:NOMD) has declined more than 11% (as of 12:41 pm GMT-5) since the release of its fiscal Q4 2025 earnings on February 26. The company grew its quarterly revenue by 9.76% year-over-year to $912.43 million, but missed expectations by $2.95 million. The EPS of $0.51 also fell short of the expectations by $0.01.
Following the release, on February 27, Scott Marks CFA from Jefferies reiterated a Buy rating on the stock but lowered the price target from $17 to $16. On the same day, Stephen Powers from Deutsche Bank also lowered the firm’s price target on Nomad Foods Limited (NYSE:NOMD) from $18 to $15 and maintained a Buy rating.
For the full year, the company experienced a 2% decline in sales, a decrease of 250 basis points in gross profit margins, and a 7% decline in adjusted EPS. This was mainly due to a loss of $100 million to supply chain inflation, as the company didn’t raise consumer prices. The guidance for 2026 isn’t optimistic as well. Management expects organic sales to drop by a further 2% to 5%, along with adjusted EPS to fall between 4% to 13%. However, this is due to 2026 being a transformative year under the new Chief Executive Officer, Dominic Brisby.
Nomad Foods Limited (NYSE:NOMD) is Europe’s largest frozen food company, manufacturing and distributing products like fish, vegetables, poultry, meals, pizza, and ice cream across over 22 European markets.
3. Rio Tinto Group (NYSE:RIO)
Rio Tinto Group (NYSE:RIO) is one of the Best Undervalued UK Stocks to Invest In. On February 27, Ben Davis from RBC Capital reiterated a Hold rating on the stock with a 5,900p price target. Earlier on February 24, Amos Fletcher from Barclays downgraded the stock from Buy to Hold and lowered the price target from 6,885p to 6,600p.
The ratings follow the company’s fiscal 2025 earnings release, announced on February 19. Rio Tinto Group (NYSE:RIO) delivered an 8% year-over-year increase in net cash generated from activities to reach $16.83 billion. The adjusted EBITDA grew 9% during the same time to reach $25.4 billion. Management highlighted an 8% in copper equivalent production, driven by the completion of the Oyu Tolgoi underground copper mine and ramp-up in Pilbara iron ore. Moreover, the company also delivered record annual bauxite production and showed strong growth in the aluminum segment.
Fletcher from Barclays downgraded the rating and lowered the price target despite strong results. He said in a research note that iron ore prices are near seasonal peaks; however, seasonal headwinds are expected to result in a decline. Moreover, the analyst also noted that the company’s valuation discount to its peer BHP is also the narrowest since 2020, limiting further upside after Q4 gains.
Rio Tinto Group (NYSE:RIO) is a leading global mining and materials company headquartered in London, United Kingdom. It focuses on exploring, mining, and processing essential mineral resources across more than 35 countries.
2. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is one of the Best Undervalued UK Stocks to Invest In. On February 27, Mizuho analyst Yaron Kinar lowered the firm’s price target on the stock from $392 to $358, while maintaining a Buy rating. Earlier, on February 26, Bob Huang from Morgan Stanley reiterated a Hold rating on Willis Towers Watson Public Limited Company (NASDAQ:WTW) and lowered the price target from $345 to $330.
Yaron Kinar from Mizuho said in a research note that the price target adjustment is based on the recent selloff in the insurance property and casualty sector. The firm views AI as a low disruption threat for insurance brokerages such as Willis Towers Watson, which target middle-market and larger accounts. The firm noted that disintermediation risks from AI are instead concentrated in mass-market personal lines and small-to-medium enterprise (SME) segments.
Similarly, Huang from Morgan Stanley noted that the updated price target follows the Q4 reports in the property and casualty insurance group. The firm believes that Insurers with differentiated underwriting performance are positioned to post stronger share price gains. The positive outlook for differentiated underwriters comes despite weak pricing and ongoing AI headwinds.
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is a global advisory, broking, and solutions company focused on delivering data-driven insights for managing people, risk, and capital.
1. Pearson plc (NYSE:PSO)
Pearson plc (NYSE:PSO) is one of the Best Undervalued UK Stocks to Invest In. On February 27, Pearson plc (NYSE:PSO) released preliminary results for fiscal 2025. The company reported 4% growth in underlying sales along with a 6% growth in underlying profits during 2025.
Management attributed sales growth to across-the-board strong performance. Notably, Virtual Learning delivered 8% growth during the year, with 18% growth during the second half of 2025. Moreover, adjusted operating profit reached £614m, with margins expanding from 16.9% to 17.2% due to cost efficiencies and sales leverage. Management noted that the operating cash conversion stayed strong at 93%, despite working capital needs from the Q4 sales surge and investments.
Looking ahead, Pearson plc (NYSE:PSO) expects mid-single-digit underlying sales growth and adjusted operating profit of £640 million – £685 million for fiscal 2026.
Pearson plc (NYSE:PSO) is a UK-based learning company focused on education, assessment, and certifications. Its key divisions include Assessment & Qualifications, Virtual Learning, Higher Education courseware, English Language Learning, and Enterprise Learning & Skills with vocational qualifications.
While we acknowledge the potential of PSO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PSO and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
