A number of FTSE 350 (^FTLC) stocks are trading on steep discounts, despite having outperformed the UK market over five years, according to an analysis by trading and investment platform IG.

The list of companies ranges from household names to industrial firms, that are trading on a significantly lower price-to-earnings (p/e) ratio, compared to their five-year average.

A p/e ratio measures a company's current share price against its earnings per share and is used by investors to help determine how attractive its stock is, as a lower p/e ratio can indicate that a company is undervalued.

“With such a heavy focus on US tech and the hugely volatile global macro environment, UK investors may have missed some of the quiet compounders closer to home, something recently noted by BlackRock’s Larry Fink," said Chris Beauchamp, chief market analyst at IG.

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"These UK names aren’t cheap because they’ve struggled – they’re cheap despite delivering," he said. "That’s what makes this list particularly interesting for value-minded investors."

This comes despite the fact that the FTSE 100 (^FTSE) hit a fresh all-time high in March and is currently trading near record levels. The FTSE 100 is up 6.9% year-to-date and the FTSE 350 – which covers the UK's large and mid-cap stocks – is up 6.1% so far this year. US markets, meanwhile, have experienced more volatility as US president Donald Trump pushed ahead with his tariff agenda. Choppy trading has left the S&P 500 (^GSPC) 0.7% in the red year-to-date.

“For years, UK stocks have been ignored by global investors, but that view is starting to change," said Beauchamp. "A cooling inflation picture, renewed interest in income-generating assets, and the prospect of several rate cuts this year are creating a very different environment. If global capital starts to rotate back into value – the UK is well placed to benefit."

With that in mind, here are the "bargain" UK stocks that IG found had outperformed the FTSE 350 over the past five years.

Smiths Group (SMIN.L)

Engineering company Smiths Group (SMIN.L) topped IG's rankings, having delivered a total return – comprising of both share price growth and dividends – of 94%, despite having a p/e ratio 91% below its long-term average.

Shares in Smiths (SMIN.L) jumped on Tuesday, following a trading update, in which it reported 10.6% organic revenue growth for the third quarter. The company's Smith Detection division, which makes equipment such as baggage scanners for airports, delivered "strong double-digit" organic revenue growth in the quarter.

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On the back of the results, Smiths (SMIN.L) said it now expected revenue growth for the year to be at the top end of its 6% to 8% guidance range.

In addition, the company said it was on track to announce the sale of its Smith Interconnect business, which provides products such as defence antenna systems, by the end of the 2025 calendar year. It said this would be followed by the separation of Smiths Detection through a UK demerger or sale.

Sainsbury's (SBRY.L)

In second place on IG's list was supermarket Sainsbury's (SBRY.L), with a five-year total return of 92% but a p/e ratio 64% below its long-term average.

Sainsbury's (SBRY.L) released its full-year results in April, in which it reported revenues growth of nearly 2% to £32.8bn ($44.1bn) and profit after tax climbing 76.6% to £242m.

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Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Sainsbury's (SBRY.L) has been "punching above its weight in the supermarket sector".

"Sainsbury's (SBRY.L) continues to scoop up market share, in large part due to a herculean effort to improve products, value perception and innovation more generally," she said. "This should stand it in good stead if price wars do break out, as has been expected, among grocers."

Drax Group (DRX.L)

Next on the list is power generation business Drax Group (DRX.L), which has generated a total return of nearly 279% over five years but has a p/e ratio 60% below its long-term average, according IG's analysis.

The company operates the UK's biggest power plant in North Yorkshire, which generates around 5% of Britain's electricity. However, Drax (DRX.L) has faced scrutiny over the sustainability credentials of its biomass plants, which burn wood pellets to produce power.

In a trading update at the beginning of May, Drax (DRX.L) raised its guidance for adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the full-year 2025, saying it now expected this figure to be at the top end of consensus estimates.

Drax (DRX.L) also said that it was continuing to target post-2027 recurring adjusted EBITDA of £600m to £700m.

Carnival (CCL.L)

Cruise operator Carnival (CCL.L) ranked in fourth place, with the stock having generated a total return of 79% over the past five years, recovering some ground since the pandemic, but is trading on a 37% p/e discount.

In results, published in March, Carnival (CCL.L) posted a record first quarter revenue of $5.8bn (£4.3bn), which was up more than $400m on the same period last year.

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The company also delivered record first quarter operating income of $543m, which was nearly double the previous year.

On the back of these results, Carnival (CCL.L) said it now expected adjusted net income for 2025 to be up more than 30% on 2024, and be $185m higher than guidance issued in December.

Spire Healthcare Group (SPI.L)

Private healthcare provider Spire Healthcare Group (SPI.L) shares have generated a total return of nearly 119% over the past five years, according to IG, but the stock is trading on a p/e ratio that 36% below its long-term average.

Shares in Spire (SPI.L) tumbled in March after the company warned in its full-year results that it expected to take a £30m hit to profits this year. It said this was partly down to increases to employer national insurance contributions and in the minimum wage, which were announced in the autumn budget, and came into effect in early April.

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Despite the results continuing to weigh on the stock, Deutsche Bank (DBK.DE) director of healthcare equity research Kane Slutzkin reiterated a "buy" rating on the stocks in a note on Thursday.

"We attended a roundtable with management ... with a focus on the primary care business and its ambitions to grow its EBITDA to £40m over the medium term," he said.

"An integrated and more joined up healthcare model certainly makes sense in today's world, with a focus not only on treatment, but prevention and early diagnosis too," Slutzkin explained. "We left the meeting with a greater sense for what Spire (SPI.L) would like to achieve, in a very fragmented market, believed to be of similar size to the UK hospital care market (c.£6bn), with upside risk to our estimates, should they deliver."

"The pathway to quadrupling its EBITDA might sound ambitious, but comes off a low base, has strong organic and inorganic drivers and room for gradual margin expansion," he added.

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Rounding out IG's top 10 "bargain" stocks were promotional merchandise company 4imprint (FOUR.L), medical device company ConvaTec Group (CTEC.L), bakery chain Greggs (GRG.L), insurance company Admiral Group (ADM.L) and hospitality company PPHE Hotel Group (PPH.L).

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