Are these the best cheap shares to watch in January 2026?

The FTSE 350’s solid year has seen it gain 17%, a very creditable performance, especially when April’s volatility is taken into account. As 2026 begins, are there still possible bargains?

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Best cheap shares to watch

These stocks have been selected based on the discount of the current price-to-earnings (P/E) ratio to the five-year PE ratio. Always do your own research. Past performance is not a guide to future performance.

1. Metro Bank Holdings
2. WPP
3. UNITE Group
4. Trainline
5. Hilton Food Group

Best FTSE 350 shares performance table

Metro Bank Holdings (MTRO)

Metro Bank trades on a P/E of 7.33, around 78% below its five-year average of 32.89. That's a huge discount, and it tells you all you need to know about investor sentiment following years of restructuring and governance issues.

The bank has done the hard yards. It's refocused on core retail and commercial banking, exited non-core activities, and cut costs. Capital ratios have improved and deposits have stabilised. Recent results point to a clearer path towards breakeven profitability.

But earnings remain vulnerable to credit conditions and interest rate movements. The brand is still recovering, growth expectations are limited, and returns on equity lag well behind sector peers. The market is pricing in scepticism, not optimism.

That said, the valuation does look undemanding if management can deliver on operational execution. The low multiple suggests limited upside is priced in, which means there's scope for a re-rating if things improve materially. A big 'if', admittedly.

Metro Bank weekly candlestick chart

WPP (WPP)

WPP trades on a P/E of 9.58, roughly 70% below its five-year average of 31.69. The market has clearly moved on from the days when advertising groups commanded premium multiples.

The discount reflects real concerns. Traditional agency models face structural headwinds, client spending remains cautious, and technology is disrupting marketing services faster than many expected. Organic revenue growth has disappointed, and margins are under pressure from wage costs and investment in AI and data capabilities.

To be fair, WPP still generates strong cash flows and maintains a solid balance sheet. It has exposure to growth areas like digital advertising, commerce and analytics. The valuation suggests the market is assuming muted growth rather than existential crisis.

Any improvement in client demand or clearer evidence that AI investments are driving efficiency gains could help narrow the discount. But competitive intensity remains high, and the glory days of double-digit multiples look unlikely to return anytime soon.

WPP weekly candlestick chart

UNITE Group (UTG)

UNITE Group trades on a P/E of 7.61, around 63% below its five-year average of 20.42. Higher interest rates have hit the UK property sector hard, pushing up financing costs and weighing on valuations across the board.

Despite this, UNITE benefits from structurally strong demand for purpose-built student accommodation. Rising student numbers and supply constraints in key university cities underpin the business. Rental growth has held up well, supporting income visibility even as asset values have come under pressure.

The discount reflects near-term concerns about balance sheet sensitivity and refinancing risks rather than doubts about long-term demand. As interest rates stabilise or ease, the valuation gap could narrow, particularly if net asset value trends improve.

Regulatory risk around rents and planning remains a factor, though. Investors will want to see how the company navigates refinancing and whether it can sustain returns as the rate environment shifts. The valuation looks undemanding, but property remains out of favour for now.

Trainline (TRN)

Trainline trades on a P/E of 12.85, roughly 58% below its five-year average of 30.82. The discount reflects regulatory uncertainty in the UK rail market, particularly around potential changes to ticket retailing under rail reform.

Passenger volumes have recovered since the pandemic, but growth has been uneven and remains exposed to economic conditions and fare affordability. There's a legitimate question about how sustainable current growth rates are.

That said, Trainline's asset-light model, strong brand recognition and growing international presence provide some comfort. Digital ticketing penetration continues to rise across Europe, and margins remain attractive thanks to scalable technology and low capital intensity.

The market is clearly pricing in slower growth and heightened policy risk rather than balance sheet weakness. Greater clarity on rail reform and sustained growth in international ticket sales would help support a re-rating. Until then, the shares look reasonably valued but not particularly cheap given the uncertainties ahead.

Trainline weekly candlestick chart

Hilton Food Group (HFG)

Hilton Food Group trades on a P/E of 11.71, around 55% below its five-year average of 26.03. The discount reflects the challenging backdrop facing food manufacturers, with input cost volatility and margin pressure creating headwinds across the sector.

The company supplies prepared protein products to major supermarkets, which provides volume visibility but also creates client concentration risk. Pricing negotiations with retailers can be difficult, particularly when input costs surge. There's limited pricing power in a competitive market.

On the positive side, Hilton benefits from long-term partnerships with major retailers and operates in categories with relatively stable demand. The business generates cash and has been expanding internationally, which offers some growth offset to mature UK operations.

The valuation suggests the market is pricing in continued margin pressure and limited earnings growth rather than existential concerns. Any stabilisation in input costs or successful international expansion could support a modest re-rating. But food manufacturing rarely commands premium multiples, and structural challenges around margins and client concentration aren't going away.

Hilton Food Group weekly candlestick chart

How to invest or trade in cheap shares with us

1. Learn more about cheap shares
2. Choose whether to trade or invest
3. Open an account with us or practise on a demo
4. Select your opportunity
5. Choose your position size and manage your risk
6. Place your deal and monitor your trade

When you invest in cheap shares, you hold them over several years with the view of building wealth over time.

Trading takes more of a short—term approach and takes advantage of small market movements. When you trade you can also benefit from leverage.

Leverage provides you with greater exposure to financial markets than your initial deposit would otherwise allow as market movements are magnified. For example, with 5:1 leverage, you could open a £5,000 position while only depositing £1,000 as ‘margin’. A 10% market movement could result in a 50% gain or loss on your deposited margin.

Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.

Best cheap shares to watch summed up

Given the current economic climate, with the UK economy entering into a phase where interest rate cuts are more likely, the above stocks have been identified as having growth potential.²

These companies are just a small selection of top cheap stocks to buy in 2025. Remember that any company can also fail and always do your own research.

Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider. * Learn more about trading or investing in shares with us, or open an account to get started today.

*Based on revenue excluding FX (published financial statements, October 2021).

Footnotes:

¹ IMF, 2025

² Please note growth is never guaranteed. There’s always the risk it could drop in value and you could lose money.