I see plenty of value in UK shares!

It’s been a topsy-turvy year so far for the FTSE 100. It’s up 5.8% in 2024. Nonetheless, I still see a lot of value in a number of UK shares.

Its rise in 2024 doesn’t tell the full story. During the course of the year, it has fallen as low as 7,446.3 points and climbed as high as 8,433.8 points.

It’s down 0.3% in the last month after nosediving in the first week of August. While it has since recovered, talk out of the US recently about a potential recession and stock market correction or even crash have impacted the UK market.

But global bank JP Morgan was singing the praises of the UK market last week. It said Britain “is a good place to be in when activity is disappointing”.

Furthermore, it highlighted that “if global equities see a pullback into summer, the UK could be a relative winner”. That could be my sign to go shopping.

Value to be had

What makes it even better is that a number of UK equities look cheap. The average price-to-earnings (P/E) ratio on the FTSE 100 right now is around 12. Historically, that figure has sat around 14 to 15.

With that in mind, one stock I’m really liking the look of is JD Sports Fashion (LSE: JD.). It has been on my watchlist for a while now. If I had the cash, I’d strongly consider opening a position today.

Where the Footsie has struggled over the last month, JD has been gaining ground. Its share price is up 12.6%. In the last six months, it has jumped 18.7%. However, a poor performance over the last year as a whole means the stock is still down 21.9% year to date and 14.2% over the last 12 months.

But given major banks reckon the UK could be the place to be, I think it’s worth delving deeper into JD.

The stock looks dirt cheap. It trades on a P/E of 12. That’s slightly above the FTSE 100 average. However, its shares have historically traded on a P/E closer to 23. That signals there may be good value in them today. Looking ahead, its forward P/E is just 9.2.

Weak spending

However, I mustn’t ignore why its share price has taken such a beating over the last year. During that time, the business has issued a couple of profit warnings that have sent the stock spiralling. JD pinned its poor performance down to “more cautious consumer spending”.

Consumers are still tightening their belts and I reckon we could see this continue in the months ahead. That’ll pose a challenge for JD.

Falling rates

But for long-term investors like me, is this a massive threat? Maybe not.

Interest rate cuts should help JD. A fall in rates is likely to lead to a pick-up in spending. That’s because the cost of borrowing becomes cheaper. On top of that, consumers are likely to be discouraged from saving due to lower rates on savings accounts.

Furthermore, the firm is making good headway with its five-year strategy. This includes aim to reach double-digit market share in key regions. As part of that, it recently acquired US brand Hibbett, which has over 1150 stores. With that in mind, I see value in JD today.