According to new analysis, the cheap cost of UK stocks, as a result of the pandemic will see the country experience an unprecedented recovery.
This claim has been made by a new UK profit index from J O Hambro, which reports that UK equities are valued at “deep discounts” compared to other nations and historical trends.
This is the result of both low valuations and portfolio managers’ low weightings to UK stocks and it means that the nation’s stocks are now a quarter cheaper than US stocks and one-seventh less expensive than European stocks (based on a price to earnings ratio).
The report states that analysts expect an “unprecedented” recovery in UK company profits in “both scale and speed” in the next year.
This estimation seems to be backed up by the latest IMF economic data, which shows the UK economy growing at a rate of seven per cent – faster than any other European nation.
As a result of this growth, the report estimates that UK plc earnings will double to £110 billion in the 12 months to March 2022.