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The UK stock market is having a great run at the moment. After years of underperformance, it's suddenly going up.
Here, I'm going to highlight three stocks that I think could do well if this trend continues. In my opinion, these stocks are undervalued and I think they are worth considering as part of a diversified portfolio today.
right movement
First of all, we have right movement (LSE: RMV). Operates the UK's largest property search portal.
I think this stock is cheap right now.
Rightmove, a high-quality internet company with an exceptional track record, is one of the most profitable companies in the FTSE 100 index.
However, right now, it is trading with a P/E ratio of just 20.8, falling to 18.5 based on next year's earnings forecast.
In my opinion, that earnings multiple is too low.
If this company were listed in the United States, I think its P/E ratio would be between 25 and 30.
It's worth noting that Rightmove could face more competition in the coming years. Recently, its rival OnTheMarket was bought by an American company with significant financial power.
However, as a user of the Rightmove app and website, I'm pretty sure people will continue to use their services.
It is worth noting that analysts of Morgan Stanley just raised its price target to 650p. That's about 20% above the current share price.
Ashtead
The next action I want to focus on is Ashtead (LSE: AHT). It is a construction equipment rental company that generates a large portion of its revenue in the United States.
This stock has done quite well this year. So far this year, it has increased approximately 10%.
However, compared to its main American rival, United Rentals, which is up more than 20%, has actually dramatically underperformed. So I think there is still some catching up to do.
I will point out that German bank It has a price target of 6,800 pence, 15% above the current share price.
Looking at analyst earnings forecasts, Ashtead shares are currently trading at a forward P/E ratio of around 18.
For a company that is well positioned to benefit from the huge infrastructure boom in the US, as well as things like concerts and live events, I think multiples are attractive.
That said, construction is a cyclical industry. Therefore, there is always a possibility of an industry slowdown.
JD Sports Fashion
Finally, we have JD Sports Fashion (LSE: JD.). It is a leading retailer of sports footwear and clothing.
I find this stock attractive for a couple of reasons.
One is that it has seen a huge drop in the last two and a half years. Currently, it is almost 50% below its highs.
Another is that it is very cheap. Currently, the company's P/E ratio is less than 10.
That seems too low for a company that sells Nike and adidas sports shoes, which are usually in high demand, and are exposed to major trends such as the informalization of fashion and greater attention to well-being.
Of course, there is a risk of a slowdown in consumption here. There are signs that JD's core demographic could be running a little short on cash due to inflation.
However, at the current valuation, I think there is a margin of safety.
