From Sainsbury’s to Greggs, IG analysis reveals list of British bargain stocks trading on a discount
IG looked at FTSE 350 firms combining strong returns with undervalued share prices
Each has outperformed wider market over 5 years but currently trades at discount
Top names include Sainsbury’s, Carnival, Admiral, Greggs and Drax
London, Tuesday 20th May – Analysis from global trading and investing platform IG has identified a list of British ‘bargain’ stocks delivering strong long-term returns – yet still trading at steep discounts based on their historic valuations.
The list includes household names like Sainsbury’s, Carnival, Admiral Group and Greggs, alongside high-performing industrials such as Smiths Group and Drax. Each has outpaced the broader FTSE 350 over the past five years – and now trades on a significantly lower price-to-earnings (P/E) ratio compared to its five-year average (See table below).
The P/E ratio is used by investors as a quick measure of how attractive a company’s stock is, with a lower P/E ratio indicating that a company could be undervalued.
Smiths Group topped the rankings, delivering 94% returns over five years despite a P/E ratio 91% below its long-term average. Similarly, Sainsbury’s has returned 92% over five years but is still trading on a 64% P/E discount – suggesting investors may be overlooking the supermarket's improving fundamentals and recent strategic gains.
“This is a classic case of strong performance being ignored by the wider market,” said Chris Beauchamp, Chief Market Analyst at IG. “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. These UK names aren’t cheap because they’ve struggled – they’re cheap despite delivering. That’s what makes this list particularly interesting for value-minded investors.”
Also among the top 10 were Drax Group, which has delivered 279% in five years amid rising energy security concerns and the global energy transition, and Carnival, which has returned 79% to investors post-pandemic but is still priced well below pre-Covid norms. Another to make the list was Greggs, which despite a recent surge, is well below last year’s valuation and its average P/E ratio over five years.
The analysis arrives at a potentially pivotal moment for UK equities. While the FTSE 100 has recently hit record highs, UK markets remain relatively unattractive and undervalued versus global peers, with the UK government currently taking steps to improve the flow of money into UK capital markets.
Beauchamp added: “For years, UK stocks have been ignored by global investors, but that view is starting to change. A cooling inflation picture, renewed interest in income-generating assets, and the prospect of several rate cuts this year are creating a very different environment. If global capital starts to rotate back into value – the UK is well placed to benefit.”
Table shows FTSE 350 companies that have outperformed market over five years, ranked by P/E ratio discount
| Rank | 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 | 18.9% | 93.8% | 23 | -91% |
| 2 | Sainsbury’s |
2.0% | 91.8% | 15 | -64% |
| 3 | Drax Group | -4.9% | 278.8% | 4 | -60% |
| 4 | Carnival |
-12.6% | 78.8% | 13 | -37% |
| 5 | Spire Healthcare Group | -12.0% | 118.6% | 32 | -36% |
| 6 | 4imprint |
-23.8% | 120.2% | 11 | -34% |
| 7 | ConvaTec Group | 23.2% | 49.2% | 39 | -32% |
| 8 | Greggs |
-26.9% | 51.6% | 14 | -30% |
| 9 | Admiral Group | 26.2% | 101.8% | 15 | -25% |
| 10 | PPHE Hotel Group | -18% | 46.3% | 21 | -24% |
Data was taken from Bloomberg after market close on Friday 16th May 2025. Past performance is not an indicator of future results.
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