The 11 dirt-cheap British shares tipped by consultants to soar .. and ALL however one pay a dividend: JEFF PRESTRIDGE

Interest rates may be heading higher, bond yields are going through the roof, and the Artificial Intelligence bubble is in danger of deflating any time now. But the UK stock market seems unconcerned.

Already this year, the FTSE 100 and broader FTSE All-Share Index have delivered respectable returns of 5.34 and 5.6 per cent – and some believe there is more to come.

Laura Foll, an investment manager at equity house Janus Henderson, is among them. At the Investor Summit 2026 conference a couple of weeks ago in London, she gave a captivating speech on the relative cheapness of the UK stock market.

Foll, who co-manages the FTSE 250 investment trust Law Debenture, says the UK stock market sits at a 35 per cent discount to other global stock markets. In plain English, it’s dirt cheap compared to other investment destinations.

While there are no guarantees when it comes to investing, this discount represents an opportunity for investors to lock into attractive long-term returns.

The logic is simple. If you buy the stock market when company valuations are relatively low, you stand a better chance of making exciting returns than if you purchase it when share prices are inflated (as they are in the United States). Buy low, sell high.

Is Foll talking up her own book? After all, Law Debenture’s equity portfolio is 90 per cent invested in the UK.

Not at all. Already this year, she has extracted strong returns from the UK market by holding undervalued UK shares which have come good.

Foll was one of nine investment experts who contributed to an article I wrote at the start of this year on some of the undervalued UK stocks which could come good in 2026.

Her pick, motoring and cycling specialist Halfords, has delivered in spades, generating a share price gain of 73 per cent plus a 6p-a-share dividend which was paid last month. The shares currently trade at £2.56.

For the eight UK listed companies identified by our experts (two of whom chose oil giant BP) as ‘dirt cheap’ on January 11, an investor who purchased £1,000 of shares in each of them the following day at the market’s opening price would now be sitting on a 28 per cent gain. They would have turned £8,000 into £10,240, although this sum would be chipped away by stamp duty and dealing charges.

To ameliorate the charges, all eight companies have paid dividends since January 12. Five have recorded double-digit share price gains, while investment platform CMC Markets has seen its shares rise by nearly 98 per cent (the pick of Tom Moore, investment director at asset managers Aberdeen).

To put these gains into perspective, an £8,000 investment in funds tracking the FTSE 100 and FTSE All-Share would now be worth £8,427 and £8,448. Our stock pickers have triumphed.

Most panellists believe their January ‘picks’ still have legs: their views are given below. Yet in light of Foll’s argument that the UK stock market remains undervalued, they have also provided a list of 11 other stocks whose share prices look compelling.

Please note, they are not recommendations or tips: just suggestions that might tickle your investment fancy. All bar one – mining company Amaroq – currently pay shareholders a dividend.

1. GAMES WORKSHOP (FTSE 100)

Seven Investment Management’s Ben Kumar describes Games Workshop as a ‘brilliant business’ and believes its recent indifferent share price performance – down nearly 7 per cent this year so far – is about to change.

Analysts agree, rating the company’s shares a buy or strong buy, according to data collated by Hargreaves Lansdown.

Games Workshop is a UK manufacturer of miniature war games which are sold through its stores, independent outlets and online. Kumar believes it will benefit from many parents starting to encourage their children to have ‘real-world experiences rather than virtual ones via their smartphone’.

Analysts say the shares, currently priced at £172, could head towards £220.75 over the next 12 months. Dividends are quarterly and equate to an annual yield of 1.9 per cent.

2. LAND SECURITIES GROUP (FTSE 100)

This company owns a portfolio of prime retail and office properties in the UK and earns its revenues from tenants. Part of this cash flow is then passed on to shareholders by way of dividends.

Although the threat of higher interest rates does not favour commercial property companies – it increases their borrowing costs – Janus Henderson’s Foll says Land Securities is in a good position.

She explains: ‘Dig beneath the surface a bit and Land Securities’ business fundamentals look strong. It is benefiting from decade-high levels of occupancy and rental growth – and its borrowings are in part protected by fixed interest rates. This means its earnings are comparatively more insulated against rising borrowing costs than those of some rivals.’

Its share price is up just 2.3 per cent over the past year, but the big plus is a dividend yield of 6.6 per cent. Divis are paid twice a year.

3. LLOYDS (FTSE 100)

Although shares in Lloyds Banking Group are up 23 per cent over the past year, eToro global market strategist Lale Akoner says its market valuation still looks ‘modest’ compared to the profits it is generating.

Half-year profits for this year were £4.3billion (23 per cent up on the first half of 2025) and Akoner says profits are expected to grow strongly over the next few years.

She adds: ‘The icing on the cake is that Lloyds is expected to generate plenty of excess capital and return a significant amount of that cash to shareholders through dividends and share buybacks.’

The shares, priced at £1.04, provide a dividend yield of 3.5 per cent, with the interim divi for this year being up on last year (1.58p a share, compared to last year’s 1.22p).

Akoner says there are economic risks which could undermine the investment case for Lloyds: a sharp slowdown in the UK economy may result in an increase in borrowers struggling to repay loans, weakening its profits.

Yet she adds: ‘Investors are still being reasonably well compensated for taking that risk.’ Sixty-five per cent of analysts say Lloyds’s shares are a buy, compared to 10 per cent who think they are a sell.

4. SHELL (FTSE 100)

Despite a strong stock market performance this year, energy giant Shell is still seen by some investment experts as undervalued, especially when compared with international rivals.

Jason Hollands, managing director of Bestinvest, says shares in Shell trade at ‘undemanding valuations’ despite rocketing petrol prices.

‘Shell looks cheap relative to global peers such as US rivals ExxonMobil and Chevron,’ he adds. ‘Its shares also look good value compared to the FTSE 100 in general.’

Shell’s shares have risen by 32 per cent over the past year. In comparison, ExxonMobil and Chevron have recorded respective returns of 43 and 34 per cent.

Shell pays quarterly dividends and its shares provide a yield of around 3 per cent. Ratings collated by Hargreaves Lansdown indicate that 58 per cent of analysts say its shares are a buy: none say they are a sell.

5. COATS (FTSE 250)

Coats is the world’s largest manufacturer of industrial sewing threads and has a history dating back to 1755.

Although the business is somewhat understated, Artemis’s William Tamworth says it makes strong margins and dominates its market.

He adds: ‘Coats’s products represent a small proportion of the total costs involved in making clothing and specialist footwear components such as insoles. But they are important: poor-quality thread that keeps snapping can drive up manufacturing costs for clothing companies. The shares are attractively valued.’

Over the past year, the shares are down 1.3 per cent. They provide a yield of 3 per cent. Analysts say the share price has the potential to rise from 81p to £1.20 over the next year.

6. JOHNSON SERVICE GROUP (FTSE 250)

This company goes under the radar, but if you’ve stayed in a Premier Inn, you would have slept on its sheets – and it would have laundered them. Its business is built around laundry services and the supply – and cleaning – of workwear.

Janus Henderson’s Foll is a fan. ‘It’s a market leader and it makes good margins,’ she says. She adds that its shares are undervalued – they’re down 4.9 per cent over the past year – both on historic grounds and when compared to the broader UK stock market.

The shares provide a dividend yield of 3.5 per cent, with divis paid twice a year.

7. PERSIMMON (FTSE 250)

Although house builder Persimmon was relegated from the FTSE 100 Index last month, Interactive Investor’s Richard Hunter is convinced it will come bouncing back.

He says: ‘A sustained recovery for the group is a matter of when and not if. Alongside an undemanding valuation, Persimmon is a preferred choice in the sector.’

Hunter says Persimmon could be a big beneficiary of Labour’s proposed ‘Your First Home’ scheme which will enable wannabe homeowners to buy new-build flats with a deposit of just 2.5 per cent – with a 20 per cent equity loan, initially interest-free, provided by the Government.

This is because it builds more affordable homes than many rivals. Hunter also likes the fact that Persimmon has accumulated a land bank of some 85,000 plots which it can use if demand for new homes improves.

In addition, he says its decision to manufacture its own bricks, tiles and timber frames is a smart one, saving itself £6,000 per building plot.

Persimmon’s shares are down 7.6 per cent over the past year. Priced at £12.11, they provide a dividend yield of 4.6 per cent with divis paid half-yearly. For the past two years, annual dividends have totalled 60p a share.

8. RIGHTMOVE (FTSE 250)

Shares in property website Rightmove have taken a hammering over the past year as a result of fears that Artificial Intelligence could disrupt its business model. They’ve fallen 36 per cent: 12 per cent over the year to date.

Yet Tom Moore, manager of investment trust Aberdeen Equity Income, believes the shares offer ‘significant upside’.

The trust bought shares in Rightmove in August, having last held the stock ten years ago. Moore says the company is ‘supremely positioned as the UK’s leading property portal with the highest brand awareness and strong customer engagement’.

He says: ‘Rightmove’s earnings have more than doubled over the past ten years, yet the share price has fallen, creating a great investment opportunity.’

Moore draws comfort from the fact that when Rightmove was unsuccessfully bid for by Rupert Murdoch’s REA Group in 2024, its shares were valued at around £7.75 – 74 per cent higher than the current share price. Yet earnings for the current financial year ending December 31 are 25 per cent higher than they were in 2024.

Rightmove pays dividends twice a year.

9. SAFESTORE (FTSE 250)

Self-storage company Safestore has seen its shares fall by 26 per cent this year in response to lowering its earnings outlook.

Yet Artemis’s William Tamworth believes there is scope for ‘significant earnings growth’ if the UK economy improves and house-moving activity picks up. ‘This could make a big impact on profitability,’ he adds.

The shares provide an attractive income, equivalent to a dividend yield of 6.1 per cent.

10. WPP (FTSE 100)

Temple Bar Investment Trust manager Ian Lance believes advertising company WPP has the potential to make shareholders a lot of money if newish boss Cindy Rose can turn around the company’s fortunes.

During the pandemic, shares in the company troughed at £5.50 before recovering to £12 in 2022. Today they stand at £3.74, but Lance says that if the company can stabilise its earnings the shares could head north of £5.

Key to this is a restructuring of the company which Rose has begun, bringing together businesses under the WPP umbrella and reducing costs.

Lance says: ‘Global competitors such as Publicis Groupe and Omnicom are growing their revenues which suggests the advertising industry is not in structural decline. WPP’s issues are of its own making. If Rose can fix them and stabilise – even grow – earnings per share, the upside could be significant.’

WPP is Temple Bar’s biggest holding and provides investors with a 4 per cent dividend yield.

Over the past year, the shares are up 0.9 per cent.

11. AMAROQ (FTSE ALL-SHARE)

You may not have heard of this company but Amaroq is a mining company with operations based in Greenland. It mines minerals – copper, gold and germanium – which are much in demand by businesses involved in the manufacture of semi-conductors, electric cars, solar panels and fibre optics.

Ben Kumar of 7IM says Amaroq ‘could be the main company that benefits from increasing demand for Greenland’s rich vein of minerals’.

One of the main reasons for Donald Trump’s heightened interest in Greenland is the minerals. The recent US agreement with Denmark and Greenland was focused on military issues, but there is no doubt the US has one eye on the mineral wealth to be found under the Arctic.

Amaroq’s main operations are based around the gold mine at Nalunaq, but drilling for gold and iron has commenced at Nanoq and Minturn.

Revenues jumped in the first half of this year, from $3.4million Canadian dollars to $56.2million. Its shares have also just listed on the main London Stock Exchange, having previously been on AIM.

Kumar describes this stock pick as a ‘punt’ as opposed to his other choice (Games Workshop), which he describes as a ‘longer-term investment’. Amaroq does not pay a dividend.

Is it still worth investing in our picks from January?

How our eight January 2026 picks have done

1. CMC MARKETS: UP 98%

Divis (date paid): 8.3p (14/8)

Verdict: ‘We remain excited about CMC. The quality of its business is far higher than the market perceives.’ (Moore, Aberdeen Equity Income)

2. HALFORDS: UP 73%

Divis: 6p (15/9)

Verdict: ‘Its valuation is not stretched but it’s not as clear a valuation case as it was in January.’ (Foll, Janus Henderson)

3. BP: UP 32%

Divis: 6.41p (18/9)

Verdict: ‘I still think there is a lot of really interesting upside in the share price.’ (Kumar, 7IM)

‘We still believe there is significant upside in BP’s share price.’ (Lance, Temple Bar)

4. MOONPIG: UP 28%

Divis: 5p (19/11)

Verdict: ‘It still looks attractive, especially if the company can deliver the double-digit growth it is targeting.’ (Tamworth, Artemis)

5. VODAFONE: UP 26%

Divis: 2.01p (30/7)

Verdict: ‘Vodafone is not as dirt cheap as it was, but the value story is not exhausted.’ (Akoner, eToro)

6. RIO TINTO: UP 17%

Divis: £1.57 (24/9)

Verdict: ‘Continues to offer good medium to long-term potential.’ (Hollands, Bestinvest)

7. DIAGEO: DOWN 2%

Divis: 14.94p (4/6)

Verdict: ‘Its results in August were well received, with its new strategy met with high excitement by investors.’ (Hunter, Interactive Investor)

8. GB GROUP: DOWN 41%

Divis: 4.4p (7/7)

Verdict: ‘It announced the loss of five big American customers in July, prompting a cut to earnings. We still hold the stock.’ (Tamworth, Artemis)

Note: Share gains from January 12 to October 5, 2026