FTSE 100 forecast puts UK value shares in focus

Fidelity

The FTSE 100 could climb to 11,668 points over the next 12 months, according to the latest forecast covered in the source material. That would imply further upside from recent levels and keeps attention on UK shares that still look reasonably valued.

The index may be near record highs, but not every FTSE 100 share looks expensive. Some companies still trade on modest valuations because investors remain cautious about earnings, interest rates, consumer spending and balance sheet risk.

Marks & Spencer is one example. The retailer has recovered strongly in recent years, but its shares have had a weaker 12 months. A cyber-attack disrupted the business and contributed to a 28.8% fall in pre-tax profit. That is a clear risk, not a minor issue. Investors now need to judge whether the disruption was a one-off setback or a sign of deeper operational vulnerability.

The current valuation suggests the market is still applying some caution. Marks & Spencer trades on a forward price-to-earnings ratio of 11.8 times, compared with Tesco at about 15.3 times. That does not automatically make the shares cheap, but it does show that expectations are lower. If sales and profits continue to recover after the disruption, the shares could attract more interest.

The main risk is the consumer backdrop. Higher oil prices, inflation pressure or slower interest rate cuts could all weigh on household spending. That would make it harder for Marks & Spencer to rebuild momentum. Even so, the company’s interest costs were covered 3.1 times by operating profits, which gives some comfort that its finances are not overly stretched.

British Land offers a different case. The shares have fallen around 20% over five years and now trade at a price-to-book ratio of 0.7. That means investors can buy exposure to the company’s property assets at a discount to book value. The dividend yield of 5.6% also gives the stock an income appeal.

The discount exists for a reason. British Land is exposed to interest rates, property valuations and debt costs. Its loan-to-value ratio is 39.2%, which investors should watch closely. If rates stay higher for longer, the shares may remain under pressure.

However, there is also a clearer upside case. Earnings per share rose 1% in the latest full year, while net profits are expected to grow by 6% in the current year and by 3% to 6% a year after that. Management is also selling lower-return assets and moving capital into higher-return areas.

Fidelity Special Values PLC (LON:FSV) aims to seek out underappreciated companies primarily listed in the UK and is an actively managed contrarian Investment Trust that thrives on volatility and uncertainty.

Share on:
Find more news, interviews, share price & company profile here for:

Latest Company News

FTSE 100 rises as banks gain and oil falls

The FTSE 100 rises as banking shares gain and oil prices ease, while investors monitor Middle East tensions, UK economic data and the outlook for interest rates.

UK Investment Trusts: Latest News and Fund Manager Interviews – LWDB, FGT, RICA, BIOG, FSV

Across these five interviews, several common investment themes emerge: opportunities created by undervalued UK equities, the potential benefits and risks of artificial intelligence, increasing corporate takeover activity and the importance of selecting businesses with strong long-term prospects.

FTSE 100 extends recovery as global markets strengthen

The FTSE 100 is extending its recovery with a third consecutive gain in sight as stronger global markets, healthcare stocks and miners support London shares.

Fidelity Special Values delivers 27.8% 1-year return as UK mid-caps outperform

Fidelity Special Values reported a 23.4% NAV return over the 12 months to August 2026, ahead of the 21.3% index return, with the manager continuing to identify opportunities among undervalued UK mid-cap and smaller companies.

FTSE 100 gains as housebuilders take centre stage and oil prices rise

UK markets are being shaped by a combination of housing policy, energy prices and geopolitical developments, with the forthcoming Budget likely to provide further detail on measures affecting the economy and listed companies.

Top UK investment opportunities are hiding in plain sight

UK market leadership is broadening, giving Fidelity Special Values more scope to find mispriced companies across recruitment, banking, resources and defensive sectors.

Search