UK shares: is there a reckoning coming?

On one hand, UK shares can seem like good worth in comparison with many US shares proper now.

However, many UK shares might look overvalued in goal phrases.

This 12 months has seen the flagship FTSE 100 index of main shares has repeatedly hit new all-time highs. But the British economic system is trying sluggish.

May it’s the case that, after a interval of sturdy efficiency, a weak financial outlook begins to weigh extra closely on the UK inventory market?

Restricted drivers for development

I feel it may.

In spite of everything, markets can solely defy financial gravity for therefore lengthy (albeit that may typically be fairly lengthy!)

Whereas UK shares as an entire might not presently look overvalued, what I’m not seeing is evident drivers to assist preserve pushing them upwards, given a reasonably weak financial outlook.

As some traders transfer cash out of the US as a result of political uncertainty and look to redeploy it in different markets, UK shares may gain advantage.

However by way of underlying enterprise efficiency, the UK market as an entire presently lacks apparent development drivers. I feel which will present by sooner or later by way of weaker investor enthusiasm as UK share costs preserve rising.

Market timing is a mug’s recreation

Nonetheless, there isn’t a dependable indication of when which will occur.

On high of that, I could possibly be fallacious about the place the economic system goes.

Up to now, 2025 has been illustrative of this on the international stage. There have been a number of considerations in regards to the economic system, however markets have largely taken them of their stride.

Right here’s my method

Both means, my method is to not try to time the market, however quite at all times to see whether or not I can spot high-quality companies promoting for significantly lower than I feel they might finally be price.

Clearly, if the inventory market crashes, I will probably be blissful to try to scoop up some bargains.

However even when the general market has been doing properly – like now – I feel some UK shares might proceed to supply me potential worth.

I’ve been shopping for

For instance, one share that has been doing properly these days is transport specialist Journeo (LSE: JNEO).

Information immediately (18 September) of a brand new buy order pushed the Journeo share worth as much as its highest stage in years. It’s up 76% thus far this 12 months.

It now trades on a price-to-earnings ratio of 20. That doesn’t appear clearly low cost.

Nevertheless, whereas bus shelter timetable info may not be the form of tech product that units the NASDAQ alight, Journeo is amongst UK shares benefiting from pretty easy however sensible real-world functions of proprietary expertise.

With public sector spending at excessive ranges, I feel the corporate may hopefully proceed to win a number of contracts. Each it wins not solely boosts revenues, but in addition helps enhance its credibility with different potential shoppers.  

An excessive amount of dependence on native authority prospects is a threat, if they should begin chopping their budgets. However Journeo has a number of potential for worldwide development, too, as its work with the New York Metropolis subway demonstrates.

That valuation is greater than I might usually like. However I’m hoping subsequent week’s interim outcomes may deliver but extra excellent news in regards to the firm’s outlook. I’ve been shopping for its shares.