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For much of the last decade, American tech has overshadowed UK stocks when it comes to investing. But as we enter 2026, the tables are turning.
While the S&P 500 continues to trade at eye-watering valuations, the UK market looks like the world’s last great bargain. British stocks are currently trading at historic discounts, with FTSE 100 prices averaging a modest 15-18 times earnings.
For UK investors planning for retirement, this ‘valuation gap’ presents a rare opportunity. It allows investors to buy quality stocks for 50%-60% below fair value, providing a critical ‘margin of safety’ for a retirement portfolio. If the US tech bubble deflates in 2026, these undervalued UK assets are far better positioned to weather the storm.
Here are two prime examples of British value hiding in plain sight.
3i Group
You don’t need to be a billionaire to own high-growth private companies. 3i Group (LSE: III) is a FTSE 100 giant that effectively acts as a private equity fund you can buy in your ISA.
With a share price that’s up over 1,180% in the last decade, it doesn’t look like a value stock. But due to a recent profit warning, it’s currently trading at 61% below fair value, based on a discounted cash flow (DCF) model.
The company’s core holding is Action, the Dutch discount retailer aggressively expanding throughout Europe. It’s growing at an impressive rate but because it’s not publicly listed, it’s easy to underestimate its true value. 3i’s stake alone is valued at over £21bn.
But its heavy concentration in Action is also a risk, as its success relies largely on this one holding. If budget-friendly rivals muscle in on Action’s market share, 3i’s profits could take a hit.
JD Sports
JD Sports (LSE: JD.) has seen its share price punished recently due to weakness at its key supplier, Nike. This short-term fear has created a long-term buying opportunity, with the stock currently trading at a forward price-to-earnings (P/E) ratio of just 7.2. For a company with global dominance and long-term growth runways in the US and Europe, this is ‘bargain basement’ pricing.
Unfortunately, the setback has ramped up debt and whittled away at cash reserves, leaving it exposed to financial risk if earnings don’t improve. While I’m confident it’ll recover, it’s still an issue that needs attention.
Yet despite the recent struggles, a turnaround already appears underway. As Nike’s inventory issue cleared up, JD stock looks primed for a significant recovery. Fortunately, it isn’t just relying on Nike. An aggressive expansion strategy in the US means it’s diversifying revenues away from the UK high street.
Market consensus reveals significant growth expectations, with average 12-month price targets of 116p, around 36% above today’s price. This implies the stock may be severely oversold at current levels around 85p.
The bottom line
In 2026, investors have a choice: pay premium prices for overvalued, speculative US growth stocks – or look closer to home.
By considering undervalued UK leaders like 3i Group and JD Sports, investors could gain exposure to quality companies at a price that offers above-average growth potential.
