In a swift change from former Chancellor Jeremy Hunt’s proposal of a “British Isa,” the new Chancellor Rachel Reeves is expected to disregard it in her upcoming autumn statement. Nonetheless, savvy investors can still spot valuable opportunities without needing tax shelters.

Investing at low prices can, but doesn’t always, lead to profits. It’s essential to look for British companies currently valued at bargain rates. This year, while the American Standard & Poor’s 500 index has gained 20%, the UK’s FTSE 100 index has only increased by less than 7%.

Regrettably, several underperforming sterling stocks populate my “forever fund,” ranging from major blue chips to smaller firms. Regardless, I continue to hold these shares as part of a diversified global portfolio, anticipating positive market conditions in the future.

Topping the list is Unilever (stock market ticker: ULVR), a consumer goods powerhouse valued at £123 billion, famous for Dove soap, Magnum ice cream, and Marmite. I purchased shares for £25.45 back in 2013, and they recently climbed to £48.42.

While this may seem respectable, Unilever has notably underperformed compared to American competitors, such as Procter & Gamble, which has seen shareholder returns double in the same timeframe and carries a price/earnings (PE) ratio of 28 versus Unilever’s 22.

Both companies have a strong track record of increasing dividends, and Unilever has consistently raised its payouts since 1995. The dividend yield of 3% provides a steady return while shareholders wait for the newly appointed CEO’s strategy to yield results.

Next up is Diageo (DGE), a £55 billion brewing and distilling giant that has faced challenges following the surge in home cocktail consumption during the pandemic.

Moreover, reports indicate that younger generations are drinking less than previous generations. Known for products like Johnnie Walker whisky, Guinness stout, and Smirnoff vodka, it has been a while since I last purchased these beverages.

Consequently, after transferring shares purchased for £21 in 2013, they now trade at £24.98. The underwhelming PE ratio below 19 highlights the company’s struggles compared to competitors like Brown-Forman, which trades at over 22 times earnings.

On a positive note, Diageo has increased dividends every year since 1987. The appointment of a new CEO also provides a glimmer of hope, supported by a 3.2% payout that helps maintain optimism.

Looking further down the size scale, Tufton Oceanic Assets (SHPP) is a £418 million investment trust focusing on shipping. Historically, many British investors would have had exposure to this segment, but it’s less common now. Nonetheless, over 80% of global trade is still transported by sea.

Tufton currently boasts a generous 7.1% dividend yield, having raised payouts by an average of 5.7% annually over the past five years. Shares that I acquired for 86p in August 2021 are now trading at 99p, yet they sit 16% below net asset value (NAV).

Greencoat UK Wind (UKW), another investment trust with total assets exceeding £4.7 billion, offers a 7.3% clean energy dividend yield, increasing payouts by 6% per year over the past five years.

Shares that I bought for £1.45 last August still remain around £1.38 this week, currently 11% below their NAV. I have no plans to sell, particularly since I hold Tufton and Greencoat in my Isa, which grants me tax-free income.

However, investing in British stocks isn’t solely about dividends. ITM Power (ITM) specializes in producing hydrogen from wind-generated electricity by splitting water. I initially invested at 41p per share in 2010, later taking profits at 56p before buying more for £1.24 in January 2020.

High hopes for this Sheffield-based innovator drove its share price to £5.39 in January and £4.46 in March, resulting in a significant profit. However, the shares now languish at 48p, valuing the company at £305 million.

Likewise, I first purchased stock in Fever-Tree Drinks (FEVR) at £2.11 in 2015, selling half my stake for £36.52 in 2018. Recently, the shares traded at £7.71, prompting me to add to my holding, providing a 2.2% income, just before they went ex-dividend.

None of these six British stocks is guaranteed to perform well, but all trade significantly below their peak values and/or at more reasonable valuations than foreign counterparts. Ultimately, it’s up to investors to determine if they present good value or if they are simply cheap for unconvincing reasons.

… and some local stocks that have struggled

What do Versarien (VRS), the biotechnology investment trust Schroders Capital Global Innovation (INOV), and Helium One Global (HE1) have in common?

They represent the worst case scenarios from my investment journey — stocks whose prices have plummeted by over 10% post-investment, serving as reminders that investing in British markets doesn’t always ensure solid returns.

Far from boasting, this column aims to share the ups and downs of the stock market truthfully.

Versarien, reputed for developing a “wonder material” claimed to be stronger than steel, has seen its shares, bought at £1.77 in 2018, drop to a mere 0.08p today. Ouch!

Following that, Helium One Global focuses on drilling in Tanzania. Unfortunately, shares bought at 10.6p in 2021 have decreased to 0.93p. Not a laughing matter.

Diversification slightly cushions the impact from Schroders Capital Global Innovation, where stock purchased for £1 in 2015 currently trades at 10.1p.

The lessons learned from these three cautionary tales? Both Versarien and Helium One are stark reminders of the risks associated with “moonshot” investments. Meanwhile, the Capital Global Innovation trust serves as a caution against following marketing hype blindly.

Limiting my investments in these stocks to 1% or less of my total portfolio was the best decision, ensuring I cared without losing sleep over the risks involved.

Full disclosure: Ian Cowie’s shareholdings