This year, the FTSE 100 has already hit an all-time high, albeit it has since moved somewhat lower again. Investors can associate record-setting highs with an overpriced market. Add to that widespread concerns about whether certain stock markets are in some sort of AI-fuelled bubble and it is easy to imagine why some people may scoff at the idea that shares in some well-known British businesses are currently selling for a song.
Look at the market for mergers and acquisitions, however, and a different impression may emerge. Would-be buyers – including many sophisticated global companies – have been queuing up to try and purchase UK firms.
That suggests that, in at least some cases, well-informed buyers may actually see well-known UK shares as offering good value.
Taking advantage of weakness – or spotting good value?
Take easyJet (LSE: EZJ) as an example.
It has recently received multiple offers from a single potential suitor.
So far it has not accepted any of them. It is, though, now providing some limited information to the company.
That suggests that easyJet’s board is taking the prospect of a possible takeover seriously, even if they are resistant to what is on the table so far.
The easyJet share price remains substantially below the most recently publicly revealed offer. I interpret that as suggesting that the City may have doubts about the likelihood of any deal being made.
The firm has described the bid as characteristic. In other words, the takeover approach may be taking advantage of a share price weakened in recent months by risks connected to the conflict in the Middle East, such as jet fuel price volatility and weakened demand for holiday air travel.
On the other hand, that is often the case when investing: buyers look to buy into a business when they see a potential mismatch between the price and what they believe its long-term value to be.
On the hunt for bargains
I think there is a lot to like about easyJet as a business.
It has a business model that, although somewhat seasonal, has proven it can be cash generative over the long run. It has an established customer base, strong brand and future growth opportunities.
I have recently been buying the shares, in part because some of the risks I had associated with it in recent months look to me as if they may be receding. Jet fuel having become more affordable is a case in point.
But it is not the only UK share I have been buying over recent months in the belief that there is a mismatch between a business’s current price and what I think its long-term value ought to be.
I am trying to avoid buying shares just because they have a low price. Rather, I am looking for what I believe are excellent businesses but whose share price does not seem to reflect that accurately and fully.
Even in this market, while some investors fret about AI valuations and the prospect of a bubble, I see plenty of UK shares I think fit the bill.
Should you invest £5,000 in easyJet Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if easyJet Plc made the list?
Christopher Ruane owns shares in easyJet.
