LIVE MARKETS-UBS refreshes top picks in "deeply undervalued" UK small and mid cap space

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UBS REFRESHES TOP PICKS IN "DEEPLY UNDERVALUED" UK SMALL AND MID CAP SPACE

UBS analysts have updated their top picks in the UK's "deeply undervalued" small and mid cap universe, spying discounted stockpicking opportunities over the next year even though a tangible catalyst is needed for a re-rating.

The three new additions to their ten-strong list include property firm British Land BLND.L, with UBS highlighting its 36% discount to NAV and misconceptions over the impact of work from home on the core London office market.

Endeavour Mining EDV.TO is the next new addition, being one of the few listed mid-cap liquid gold equities listed in Europe offering investors exposure to record prices of the yellow stuff.

Clothing and food group M&S MKS.L also enters the list, with UBS flagging its "structural turnaround story."

Dropping off are easyJet EZJ.L, online greetings card company Moonpig MOONM.L and Premier Inn owner Whitbread WTB.L.

The other seven are Beazley BEZG.L, ConvaTec CTEC.L, Domino's Pizza DPZ.O, IGG IGG.L, Persimmon PSN.L, Rightmove RMV.L and Trustpilot TRST.L.

The average UK stock's PE ratio is about 16% below historical discounts, says UBS, in line with discounts seen at the trough of the 2008/9 recession, directly after Brexit and at the peak of the pandemic.

A tangible catalyst is needed for a re-rating and while they are overweight UK, there are consumer strength concerns and some stagflation fears.

(Lucy Raitano)

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