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Should I buy these cheap UK shares for my Stocks and Shares ISA?

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I’m searching for some of the best cheap UK shares to buy for my Stocks and Shares ISA. Should I buy the following two British equities? Both trade on a forward price-to-earnings growth (PEG) ratio of below 1.

Moneymaker in the mire

Money printer and passport maker De La Rue (LSE: DLAR) currently seems to offer irresistible value. City analysts think earnings here will soar more than 300% this fiscal year (to March 2022). This leaves it trading on a fractional PEG ratio of 0.1. It’s not a UK share I’m prepared to take a punt on though, as I worry about its profits-making power in an increasingly cashless world.

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Today, cash transactions account for less than one in six of all payments. That compares with 25% just before Covid-19 struck. And chairperson of the Access to Cash review, Natalie Ceeney, thinks just one in 10 payments could be made with physical money in 2022. This is around a decade sooner than predictions made before the public health emergency.

Okay, De La Rue is hiking investment in its Authentication division to exploit the growing threat of counterfeit products and fraud. This could be a potential growth driver in the years ahead. But the threat to its traditional money-printing operations (from which it sources around 75% of revenues) from our increasingly digitalised world still makes it a risk too far, in my opinion.

A meaty debt pile and sizeable pension deficit also give me cause for extreme concern.

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A cheap UK share I’d rather buy for my ISA

I’d be much happier to splash the cash on Frontier Developments (LSE: FDEV) today. The video games industry has been growing rapidly in recent times, with Covid-19 lockdowns giving the market an extra shot in the arm during the past 18 months. I’ve sought to get in on the action by buying development services provider Keywords Studios.

I think games developer Frontier is another great way for stock investors like me to play this theme. And particularly so at current prices. This cheap UK share trades on a PEG multiple of just 0.6 for this fiscal year (to May 2022).  A reminder than any reading below 1 suggests an equity could be undervalued by the market.

City brokers think Frontier’s annual earnings will soar 60% this time around. It’s perhaps no surprise given the rate at which gaming is tipped to continue soaring. Indeed, Netflix’s recent decision to expand into video games illustrates the breakneck pace the industry is growing at, versus traditional media like film and television.

There’s no guarantee that software firms like Frontier will succeed in this arena. A games title can bomb on release, putting paid to years of costly development and sinking profits forecasts. But I’m encouraged by this cheap UK stock’s positive track record. Its popular titles include Planet Zoo, Jurassic World Evolution and Elite Dangerous.

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Royston Wild owns shares of Keywords Studios. The Motley Fool UK owns shares of and has recommended Netflix. The Motley Fool UK has recommended De La Rue, Frontier Developments, and Keywords Studios. 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.

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