Looking for cheap shares? This 8% yielding pick looks unmissable to me!

Sumayya Mansoor is hunting for quality cheap shares and explores this FTSE 250 giant she reckons is too good to miss out on.

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I reckon ITV (LSE: ITV) is one of a number of cheap shares too good to miss out on right now! Here’s why I’d be willing to buy some when I next have some investable cash for growth and returns.

Ad revenue drop-off hurts ITV

ITV shares have been on a downward trajectory for a few years now. As I write, they’re trading for 60p. At this time last year, they were trading for 76p, which is a 21% drop over a 12-month period.

Looking back even further, they’re down 54% over a five-year period from 132p to current levels.

In recent times, a huge dip in advertising revenue has hurt the TV giant and its bottom line. Ad revenue is a huge money maker for ITV, especially as it is one of the largest terrestrial TV channels in the UK, with a long and storied history and huge viewership.

In addition to this, the explosion of streaming giants producing quality content for consumers to access at their fingertips has changed the landscape of how we watch our favourite programmes. Some of the companies I refer to are giants such as Netflix, Amazon, and Apple.

Both of these aspects are ongoing risks and issues for ITV. With consumers changing habits for consuming content, streaming giants are taking away market share and revenue from ITV. Furthermore, ITV relies heavily on ad revenue but as macroeconomic instability has hurt the ad market, and firms aren’t spending as much, continued turbulence could hurt ITV moving forward too.

The good stuff

Moving past recent issues and potential problems, I still reckon there’s a lot of potential for ITV to bounce back.

Starting with ad revenue, I firmly believe that once volatility subsides, the level of ad revenue, which has helped ITV in the past, should grow. This could help boost its shares, performance, and investor returns too.

Next, ITV has been investing heavily in its own streaming platform, ITVX, to keep up with the times. Plus, it has a great production arm, known as ITV Studios. It produces fan favourites such as I’m A Celebrity… and Love Island. If it can continue churning out own quality content, there’s no doubt in my mind ITV shares could climb.

Finally, moving to some fundamentals, ITV shares look like a bargain to me on a price-to-earnings ratio of eight. Plus, a dividend yield of over 8% is significantly higher than the FTSE 100 and FTSE 250 averages of 3.8% and 1.9%. However, I’m conscious dividends are never guaranteed.

Final thoughts

Overall, ITV shares look like a great opportunity to me right now. The passive income opportunity looks well covered for now. Plus, ongoing production of hit shows and investment into streaming could pay off, in my opinion. Ad revenue returning could be a major boost for the business, if and when it returns. At just 60p a share, ITV shares could be one of the bargains of 2024, in my opinion.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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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