We’re at the halfway point of 2026, which is a good time to take stock of stock markets. Over the last six months, the UK’s FTSE 100 index has risen by 6%, excluding cash dividends. Meanwhile, the US S&P 500 index has jumped 9.2%, while the tech-heavy Nasdaq Composite has leapt by 12.1%.
But when I look at global stock markets today, I see bubbles inflating everywhere. For example, South Korea’s KOSPI index has soared an astonishing 176% in 12 months. Also, the US stock market is hitting valuation levels not seen since 1929, just before the infamous Wall Street Crash. Then again, UK shares still look cheap to me, including this one…
A great British business?
One old City of London expression reads, “Fund managers talk up their own books”. In other words, investors tend to sing the praises of shares they already own.
For example, my family portfolio owns the stock of Bunzl (LSE: BNZL), whose shares have endured a rough ride since hitting all-time highs almost two years ago. On 18 September 2024, this FTSE 100 share peaked at 3,732p, but then began tumbling.
At its 52-week low, Bunzl stock bottomed out at 1,981p on 21 January, down a whopping 46.9% from its record high. Back then, I’d loved to have bought into this British supplier of disposable goods to other businesses.
Bunzl describes itself as a leading distribution and outsourcing company for food-service providers and food retailers. Its products include safety and hygiene equipment, chemicals, packaging, disposable tableware, personal protective equipment, and cleaning machinery.
For decades, Bunzl was a British success story, boosting its earnings through acquisitions and organic growth across North America, the UK and Ireland, Continental Europe, and the rest of the world (mostly Australasia).
Bunzl bounces back
My family owns this Footsie stock, paying 2,292p a share for our stake on 16 April 2025 — a day when the share price collapsed by 25.6%. I saw Bunzl as another ‘fallen angel’ — a solid, well-run company with temporarily depressed shares.
As I write, Bunzl shares stand at 2,638p, valuing this group at under £8.6bn. At this level, the stock trades on an undemanding 18.7 times historic earnings, generating an earnings yield of 5.3%. This means that the dividend yield of 2.8% a year is covered a healthy 1.9 times by trailing earnings.
Bunzl shares are up 27.1% in 2026 — just the kind of comeback I was hoping for. But while the stock is up 13.7% over one year, it has risen by a mere 8.6% over five years (dividends excluded).
I’m holding tight
My family’s Bunzl stake has a paper gain of 13.1%, excluding reinvested dividends. But I have no intention of selling these shares, because I see Bunzl as a prime candidate for powerful private-equity buyers.
With revenues and earnings stabilising and recovering, this ‘boring, undervalued’ company could become a takeover target. Indeed, activist investor Elliott Investment Management recently joined the shareholder register.
Of course, Bunzl might endure yet more quarters of weaker growth and lower margins, hitting its revenues, earnings, and cash flows. But this 172-year-old FTSE 100 firm has been around since 1854, so I think there’s plenty of life left in old Bunzl yet!
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Cliff D’Arcy has an economic interest in Bunzl shares.
