Investing in UK shares in 2024 could be a game-changing decision for investors. The stock market’s already enjoyed a double-digit rally, yet many companies continue to trade at cheap valuations. And that’s despite some exciting growth catalysts waiting just around the corner.
These opportunities don’t come around often
The Bank of England’s already begun cutting interest rates. Debt’s now getting cheaper, relieving pressure on both households and businesses. But lower rates also make new borrowings more viable, sparking fresh economic growth. In fact, we might have already started seeing this.
Looking at the latest figures from the Office for National Statistics, real GDP growth’s rising much faster than expected. In the first quarter of 2024, it landed at 0.7%, followed by 0.6% in the second quarter. Subsequently, the International Monetary Fund has revised its full-year prediction to 0.7% from 0.5%, with growth expected to expand to 1.5% in 2025.
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That may not sound like a huge difference. But when scaled into the trillions of pounds, a 1.5% increase translates into an enormous sum of money for investors to capitalise on. And when ignoring the short-lived post-pandemic boom, this level of GDP growth hasn’t been seen in over a decade.
Capitalising on the surge
A big chunk of the economic growth seen so far has originated from services, with scientific activities leading the charge in the first half of 2024. And given the upward trend, this is where I’d start my search for potentially winning investments. And with that in mind, Judges Scientific (LSE:JDG) could be worth a closer look.
The scientific instrument maker has an impressive track record of delivering value to shareholders. Its latest results showed a mixed bag when it comes to demand, particularly from Asia. However, with trends steadily moving back in the right direction for the scientific industry, the group’s recent woes may soon be over.
In the meantime, management’s continued executing its acquisition growth strategy with a handful of new bolt-on additions to the business. Its most recent purchase was Magsputter Limited – a coating instrument manufacturer – for £12.3m.
This latest deal continues to diversify an already diverse portfolio of businesses under Judges’ umbrella. Therefore, considering this business could be the first step towards profiting from the surge in scientific investment. However, it’s critical to highlight that chunky returns are far from guaranteed.
Inspecting the price
From a valuation perspective, Judges Scientific’s long traded at a premium. And even with some demand stumbles over the last few years, the group’s forward price-to-earnings ratio sits at a chunky 26.7. In other words, investors seemingly have high long-term expectations for this business.
Therefore, it’s possible the looming expansion of scientific equipment investments is already baked into the stock price. If that’s the case, returns in 2025 and beyond may not be as gargantuan as investors might hope. Furthermore, lofty valuations invite share price volatility if things start to go south.
I admire Judges Scientific as a business. But it’s not a stock I’m tempted to buy right now, especially given that there are plenty of other opportunities for investors to explore to capitalise on falling interest rates and higher GDP growth.
