Could the stock market have a brilliant March?

So far so good! This is what many investors should be thinking about in the first few months of 2023, by the way Tesla up 87% and Meta put it at 38%. Less exciting British companies have seen significant increases in share prices, such as a 39% jump in the building products maker LOVE.

But many prices are still below where they stood last year. SIG is up 15% in that time, but Tesla and Meta have lost 24% and 17%, respectively. So, with many stock prices still below their previous levels and strong momentum in the first few months of the year, could March see the stock market boom?

Chances are the driver is up

No one knows what will happen. But I see reason to be optimistic about the outlook for the UK stock market in March.

It continues to appear undervalued in many metrics. SIG’s underlying operating profit for the latest year is estimated at around £80m. But even after the storm from 2023, SIG’s share price is equivalent to a market capitalization of £480m. That seems cheap to me.

Across the London market there are several other stocks that look cheap to me based on price-to-earnings (P/E) ratios.

Some seem undervalued in other ways. The P/E ratio at JD Wetherspoon does not appeal to me, but I hold the top this month because I have a strong prospect of a pub chain. With results due in March, I will keep an eye on how Spoons is performing.

ISA season is approaching

Another driver that could lift the stock market in March could be improving sentiment about the economy. While the UK did not post strong (if any) growth, neither did it as feared. Now the country is not in a recession.

Also, with the rush of investors looking to top up their Stocks and Shares ISA before the deadline in early April, popular stocks could see their prices rise.

But I think these factors add up to a possibly strong March, rather than a great one.

Some risks

I also think there may be a reason for the stock market to go down in March.

The 4.5% gain is visible FTSE 100 since the beginning of January represents nearly half of the total gain over the past 12 months. Investors may be ready to take a breather.

In addition, the economy still feels like it can move forward. While we are not currently in a recession, it is easy to see how we could become one. Demand in some areas is weak and inflation remains a challenge. That can lead to profits in many companies.

Looking for the long term

Overall, though, I think now is a good time to snap up a carefully selected bargain in the stock market.

Whether or not they move up in March, by buying into large businesses when they have what I consider attractive valuations, I hope to build wealth over time as an investor.

That’s the rationale behind the new move in Spoons and other February purchases like that Alphabet. I will continue to use the same approach in March – and beyond.