Here’s why I see cheap UK shares soaring in the years ahead

Story by Charlie Keough

View of Tower Bridge in Autumn© Provided by The Motley Fool

Retail investors have endured a lot of pain in the last few years and share prices have taken a beating. But instead of complaining, I want to make the most of it. That’s why I’m buying cheap UK shares.

It’s a rare opportunity I believe investors should consider pouncing on. Today, the FTSE 100 trades on an average price-to-earnings (P/E) ratio of just 11, which is below its historic average of around 14. Yet yesterday (22 April), the index closed at an all-time high. That’s a mismatch I plan to capitalise on.

Better times ahead

The FTSE 100 has risen 4.4% year to date while the FTSE 250 has climbed 0.8%. With that in mind, it seems like things could be on the up going forward.

Both indexes have been ticking upwards as investor sentiment has steadily been rising. Market spectators are gearing up for interest rate cuts as early as June as inflation slowly drops closer to the government’s 2% target. Looking ahead, as cuts continue over the months and years to come, this should provide markets with a boost.

We’ve also had some positive retail figures in the first few months of the year, which further signal that we’re heading in the right direction.

Of course, threats do persist. Rate cut talk is speculative. And while inflation is falling, it still lingers.

Yet regardless of any potential near-term setbacks, I think UK-listed companies are well-positioned for growth in the years to come. With that, I’m going shopping.