Clever has just lately joined the ranks of companies seeking to listing their shares within the US, somewhat than the UK. And no less than in the intervening time, the course of journey appears to be one-way.

An enormous cause is the truth that firms suppose – with some justification — that they’ll entice greater valuations for his or her shares throughout the Atlantic. However may there be extra on the way in which?

Rentokil Preliminary

There have been stories that activist buyers at Rentokil Preliminary (LSE:RTO) is likely to be pushing for a US itemizing. And this might be an affordable concept. 

Like Ashtead (which is within the means of switching its major itemizing) the agency generates most of its income within the US. So it wouldn’t be completely misplaced on the New York Inventory Change.

There’s additionally cause to suppose the inventory may commerce at the next a number of within the US. Rollins – its principal competitor – trades at a price-to-earnings (P/E) ratio of 58, in contrast with Rentokil at 29.

No two companies are precisely alike, although, and the FTSE 100 agency has much more debt. It’s additionally been struggling to combine a giant acquisition, which has been weighing on margins. 

Given this, the inventory buying and selling at a decrease a number of than Rollins is likely to be affordable. However I believe it’s cheaper than it ought to be for the time being, which is why I’ve been shopping for it. 

The prospect of the corporate transferring its itemizing to the US would possibly assist shut the valuation hole. That’s not a part of my funding thesis, however I do suppose it’s a sensible chance.

Experian

My Idiot UK colleague, Ben McPoland, recommended Experian (LSE:EXPN) as one other UK firm which may contemplate shifting its itemizing to the US. And it’s straightforward to see why this would possibly make sense.

The agency’s largest market is the US, which accounts for round 67% of revenues. And its subsequent largest market is Brazil, which doesn’t precisely present a cause for itemizing within the UK. 

Experian is a terrific enterprise – it supplies stories that banks want at a fraction of the price of the danger they offset. And its knowledge provides it a giant aggressive benefit.

At a P/E ratio of round 37, the inventory doesn’t look clearly undervalued. In actual fact, it seems as if the UK inventory market is doing a good job at recognising the standard of the enterprise.

There are additionally dangers to contemplate – if US inflation causes rates of interest to rise, mortgage demand would possibly fall. And this might have a knock-on impact on Experian’s enterprise. 

Regardless of the dangers, Experian’s US-listed counterparts commerce at a lot greater P/E multiples. So there is likely to be a good case for considering the FTSE 100 inventory may do higher throughout the Atlantic.

Are UK shares undervalued?

Whereas no two companies are precisely alike, UK shares clearly appear to commerce at decrease multiples than their US counterparts. However from an funding perspective, I see this as a chance.

Shopping for shares in above-average companies at below-average costs is good for long-term buyers. And that doesn’t depend upon the inventory buying and selling at the next a number of in future.

If the share price stays low, I believe there are returns to be produced from dividends and share buybacks. And that’s why UK equities make up nearly all of my Shares and Shares ISA.