The underrated UK stocks to avoid AI bubble concerns, according to this fund manager
A weaker dollar and hefty AI-related stock prices have led investors to look for deals elsewhere — and the U.K. is a good place to start, according to Sean Peche, portfolio manager at Ranmore. “You’ve got to be selective about what you buy but there’s lots of other opportunities out there in the world,” Peche told CNBC’s Squawk Box Europe — “you just got to know where to find them,” he added. U.S. equities have soared this year as the bull run on AI-related stocks continues. The Magnificent 7 index, which includes Alphabet , Amazon , Apple , Meta , Microsoft , Nvidia , and Tesla , is up around 23.5% year-to-date. Investors looking to hedge against a potential crash and take advantage of a weaker dollar, which was volatile at the beginning of the year but has somewhat stabilized, have looked for underdogs including in emerging markets . “We’ve managed to make a lot of money this year out of the likes of European banks, of Korean companies, Hong Kong listed companies,” Peche said. The fund manager is particularly bullish on travel, which is being buoyed by technology thanks to variable ticket prices, he said. “Technology is helping those businesses become far better businesses than they once were, whereas it’s creating more competitors for the likes [of] cosmetics,” he added. In terms of individual stocks, here’s what Peche has his eye on the U.K. specifically: EasyJet: “We like EasyJet , that’s in our top 10,” the fund manager said, noting that the airline’s third-quarter profits are up. Indeed, buoyed by more passengers and holiday packages, the firm posted profit before tax of £286 million ($374.7 milion) in the third-quarter, a £50 million increase year-on-year, which it said was in line with expectations. EasyJet has had a mixed performance this year, with its shares down 14.8% to-date. It reported a loss for the first six months of 2025, but said in is second-quarter results that current bookings indicate it will meet expectations for full-year profit. It now expects a rise in profits, and in routes flown and packages sold, but to earn less money per flight. Greggs: Another company in his top 10 is bakery and fast food chain Greggs , which has shed 44.7% this year. Its sales were hit during a summer heatwave, plunging as much as 15% in one July session , but the sausage roll-maker remains a beloved chain by U.K. consumers. “It’s a great business, it’s a great value proposition for customers. The price of their coffee is a fraction of many of the other high street coffee chains and, yet, the stock is cheaper than it’s ever been. And it’s all huge growth prospects,” Peche said. Greggs went “viral” on social media many times over recent years, for everything from its donuts to sausage roll-dispensing ATM in partnership with British neobank Monzo. Diageo: Diageo ‘s UK shares price popped on Monday, closing the session 5.2% higher, following the appointment of a new CEO. It’s in sharp contrast to the decade-low the drinks maker reached last week after cutting sales and profit forecasts in its earnings call. “A recent position has been Diageo, so we had a nice jump yesterday,” Peche said, despite the firm being “deeply out of favor” otherwise. The price for U.K.-listed shares is down 28.7% year-to-date. However, Peche described Guinness, which is made by Diageo, as a “jewel” that’s doing well, giving “a nice dividend yield of 4.5%.”
