Despite another year of geopolitical uncertainty and volatile markets, UK retail investors have remained remarkably consistent in what they’ve been buying. Data published during the first half of 2026 by major DIY investment platforms and investment publications points to four dominant themes: defence, UK value, high dividend income and quality compounders.
The table below brings together the FTSE 350 shares that appeared most consistently across ‘most bought’ lists from leading UK investment platforms and commentators during the first six months of 2026. Valuation figures and consensus upside are approximate market consensus as at the end of June.
| Rank | Company | Sector | Forward P/E | Consensus upside to end-2026 |
| 1 | Rolls-Royce | Aerospace & defence | ~35x | 8%-12% |
| 2 | BAE Systems | Defence | ~24x | 8%-10% |
| 3 | Lloyds Banking | Banking | ~9x | 12%-18% |
| 4 | Legal & General | Insurance | ~10x | 15%-20% |
| 5 | NatWest | Banking | ~8x | 10%-15% |
| 6 | Shell | Energy | ~10x | 12%-18% |
| 7 | BP | Energy | ~9x | 15%-25% |
| 8 | London Stock Exchange | Financial infrastructure | ~28x | 15%-20% |
| 9 | RELX | Data & analytics | ~30x | 8%-12% |
| 10 | Tesco | Food retail | ~16x | 8%-10% |
Consensus valuations rounded from market forecasts and intended as indicative rather than precise figures.
1. Rolls-Royce (LON:RR.), £14.63
Rolls-Royce has become the UK’s flagship turnaround story. The aerospace engineer now generates the majority of its profits from servicing aircraft engines under long-term ‘power by the hour’ contracts, while defence and power systems provide further diversification.
Retail investors have continued buying after another series of earnings upgrades. Defence spending across Europe remains elevated, civil aviation demand continues recovering and the company has transformed margins under CEO Tufan Erginbilgiç.
Opportunities
- European defence spending
- Strong civil aerospace aftermarket
- Small Modular Reactor potential
- Improving free cash flow
Risks
- High valuation after exceptional share price gains
- Any slowdown in global air travel
- Execution risk on nuclear ambitions
2. BAE Systems (LON:BA.), £19.015
BAE has become a core holding for many income investors.
The company builds combat aircraft, submarines, armoured vehicles and advanced defence electronics. NATO rearmament has created one of the strongest order books in its history.
Opportunities
- Multi-year defence budgets
- AUKUS submarine programme
- Record backlog
- Strong dividend growth
Risks
- Valuation now above historic averages
- Political changes affecting defence budgets
- Programme execution risk
3. Lloyds Banking (LON:LLOY), 112.5p
Lloyds remains Britain’s largest domestic mortgage lender and one of the cheapest large-cap shares in Europe.
Retail investors continue to see value in generous dividends, buybacks and low valuation despite pressure on net interest margins.
Opportunities
- Lower interest rates supporting loan demand
- Capital returns
- Digital banking efficiencies
Risks
- UK economic slowdown
- Mortgage competition
- Rising bad debts if unemployment increases
4. Legal & General (LON:LGEN), 288p
Legal & General remains a favourite among dividend investors.
The insurer combines asset management, pensions and retirement solutions with one of the highest dividend yields in the FTSE 100.
Opportunities
- Growing pension risk transfer market
- Attractive income
- Share buybacks
- Expanding asset management
Risks
- Lower investment markets
- Interest-rate volatility
- Regulatory changes
5. NatWest (LON:NWG), 676.8p
NatWest has quietly become one of Europe’s strongest capitalised banks.
The investment case centres on improving efficiency, excess capital and generous shareholder distributions.
Opportunities
- Buybacks
- Dividend growth
- Strong balance sheet
- Business lending recovery
Risks
- Falling interest margins
- UK recession
- Political scrutiny of banking profits
6. Shell (LON:SHEL), £28.735
Shell continues to generate enormous cash flow despite volatile oil prices.
Many UK investors value its combination of dividends, buybacks and growing LNG business.
Opportunities
- LNG leadership
- Capital discipline
- Share repurchases
- Energy transition investments
Risks
- Oil price weakness
- Windfall taxes
- Energy transition uncertainty
7. BP
BP has remained popular despite underperforming Shell.
Investors are attracted by its relatively low valuation and potential turnaround following strategic refocusing.
Opportunities
- Operational improvements
- Asset sales
- Higher shareholder returns
- Oil market recovery
Risks
- Execution
- Commodity price volatility
- Lower returns than peers
8. London Stock Exchange (LON:LSEG), £83.72
LSEG has transformed into a global financial data and analytics company following its acquisition of Refinitiv.
Recurring subscription revenues now dominate earnings.
Opportunities
- Financial data growth
- AI applications
- Index licensing
- High recurring revenues
Risks
- Premium valuation
- Competition from Bloomberg
- Integration execution
9. RELX (LON:REL), £23.25
RELX has become one of the UK’s highest-quality compounders.
Its legal, scientific and risk-management databases continue benefiting from AI adoption because customers require trusted proprietary data rather than public internet content.
Opportunities
- AI-enabled analytics
- Subscription revenue
- Pricing power
- Global expansion
Risks
- Premium valuation
- Slower enterprise spending
- Currency movements
10. Tesco (LON:TSCO), 470.8p
Tesco has enjoyed renewed popularity as investors seek defensive earnings and reliable dividends.
Market share gains, Clubcard loyalty and operational efficiency have supported profits despite fierce grocery competition.
Opportunities
- Market share gains
- Cash generation
- Stable dividends
- Food inflation supporting revenues
Risks
- Price wars
- Labour cost inflation
- Consumer spending pressure
What explains UK investors’ buying?
Several clear themes emerge:
- Defence: Rolls-Royce and BAE Systems continue benefiting from structural increases in global military spending.
- Income: Shell, BP, Legal & General, Lloyds and NatWest all offer attractive dividend yields alongside buyback programmes.
- Quality growth: LSEG and RELX provide resilient earnings growth supported by recurring revenues.
- Value: UK banks and energy companies still trade on significantly lower earnings multiples than many international peers despite strong cash generation. Analysts entered 2026 with around 63% of FTSE 350 stocks carrying ‘buy’ recommendations, reflecting continued optimism toward UK equities.
Investor verdict
UK retail investors have remained remarkably consistent in what they’ve been buying. The most-bought FTSE 350 stocks reflect a notable shift in retail sentiment. Rather than chasing speculative growth, investors have favoured companies with robust cash generation, improving shareholder returns and exposure to long-term structural themes such as defence, financial infrastructure and AI-enabled data services.
5 high-quality UK stocks that still look undervalued
Among the group, Rolls-Royce and BAE Systems offer the strongest structural growth drivers but trade on fuller valuations after exceptional share price gains. Lloyds, NatWest, Shell, BP and Legal & General continue to appeal to value and income investors, while Tesco, London Stock Exchange and RELX remain high-quality long-term compounders capable of delivering steady earnings growth into 2027, albeit at premium valuations.
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