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2 bargain shares you can’t afford to ignore

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With pressure on shoppers’ wallets steadily mounting amid rocketing inflation, I reckon value retailers like Bonmarche Holdings (LSE: BON) could be set to thrive in the months and years ahead.

Investor appetite for the company took off this week following the release of perky financials, the stock shooting to levels not seen since early January.

While Bonmarche chief executive Helen Connolly advised that “trading conditions post-Christmas continued to be challenging,” traders focused on news that like-for-like sales at its stores have improved in February and March following a negative result in January.

As a result underlining sales at its stores fell just 0.5% during the 14 weeks to April 1, illustrating a huge improvement at the tills more recently. By comparison, underlying sales at its outlets fell 4.3% in the 53 weeks to the start of April.

Meanwhile, Connolly also noted the huge inroads Bonmarche is making online, reflecting the massive potential of its new and more sophisticated ‘Demandware’ platform. Sales made via cyberspace shot 15.2% higher in the period to April 1, compared with the 2.2% advance punched in the full fiscal year.

The price is right

However, I believe the market has still not yet cottoned on to the vast potential of Bonmarche’s transformation package, a point underlined by the retailer’s ultra-low valuations.

In the year ending March 2018 it is expected to record a 40% bottom-line advance. This results in a P/E ratio of just 6.2 times, comfortably below the well-regarded bargain benchmark of 10 times.

And an expected 20% earnings advance in fiscal 2019 drives the multiple to a mere 5.1 times. On top of this, a sub-1 PEG reading of 0.2 through to the close of next year echoes Bomnache’s position as a hot value stock.

And there is also much for dividend chasers to get excited by, with anticipated dividends of 7.2p and 7.5p per share for 2018 and 2019 respectively yielding 9.1% and 9.4%.

Set to soar

I also reckon cut-price flyer Wizz Air Holdings (LSE: WIZZ) is on track for monster earnings growth as the business aggressively expands its footprint across Eastern Europe.

The Hungarian business saw passenger numbers leap 19.2% year-on-year in March, to 1.98m. Wizz Air’s steady spread across the region is helping drive customer numbers, Wizz Air adding 10 new routes spanning the likes of Ukraine, Poland and Romania in March alone. This took the total to more than 500 and the company’s position in the fast-growing low-cost segment is propelling traveller numbers skywards.

So like Bonmarche, I also believe Wizz Air is looking shockingly underbought by the investment community.

While the airline does not pay monster dividends like the clothing giant, expected earnings growth of 2% and 16% in the years to March 2018 and 2019 respectively create P/E ratios of just 10.9 times and 9.4 times.

I reckon this is unbelievably cheap given Wizz Air’s aggressive growth strategy, plans that should provide plenty of long-term upside as economic growth in Eastern Europe takes off.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.