As November approaches, I have been thinking about whether now could be a good time to make any new moves in my Stocks and Shares ISA.
On one hand, the economy looks somewhat fragile and it could be that company valuations fall from here. On the other hand, many UK companies already look cheap to me.
As a long-term investor, rather than trying to time the market, my focus is on buying into great companies at attractive prices.
With that in mind, here are two shares I think are dirt cheap right now. I own both and would happily add more to my Stocks and Shares ISA if I had spare cash to invest.
Legal & General
When it comes to brand recognition, the multi-coloured umbrella of financial services company Legal & General (LSE: LGEN) is familiar to generations of Britons.
With a long history and deep experience of providing such services, I see the firm as having a strong competitive advantage.
Yet despite that, it trades on a price-to-earnings (P/E) ratio in the mid-single digits. That makes it look dirt cheap to me.
High dividend yield
Legal & General also offers a dividend yield of over 9%. In recent years, the dividend has grown about 5% annually. I think the strong business performance could mean its dividend rises further in years to come, although that is not guaranteed.
What could go wrong? One risk I see is volatile markets hurting pension returns, leading some clients to move their business elsewhere. Challenging financial markets can damage performance at Legal & General, which cut its dividend during the 2008 financial crisis.
Over the long run though, I continue to think the business offers excellent potential. I already own it in my Stocks and Shares ISA. With spare funds, at the current price, I would be happy to buy more of the shares.
ITV
Are things as bad as they seem at ITV (LSE: ITV)? A P/E ratio of 9 and a five-year share price decline of 57% certainly suggests that many investors are downbeat about the prospects for the broadcaster. This week, ITV shares touched a new 12-month low.
However, that has pushed up the yield to over 8%. While dividends are never guaranteed, the ITV board has been clear about its intention to try and pay at least 5p per share in dividends annually.
Risks and rewards
The first half of this year saw the business record a year-on-year revenue decline of 1% and adjusted pre-tax profits fell over 60%. But the business remains solidly profitable. So far, a feared advertising downturn has not significantly hurt revenues, although it remains a risk.
ITV has a sizeable business both in traditional broadcast media and on newer digital platforms. It also has a large production business although slowing activity levels in the film industry could hurt demand for that.
Despite a tanking share price, no directors have dipped into their own pockets over the past six months to buy ITV shares.
At the current level though, I think the shares look dirt cheap from a long-term perspective. I would be happy to add more to my Stocks and Shares ISA in coming weeks if I had spare cash to invest.
