2 cheap shares I’ll consider buying for my ISA in 2025

Harvey Jones will be on the hunt for cheap shares for his ISA in 2025 and these two unsung FTSE 100 heroes caught his eye. Are they good value?

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In 2025 I’ll be doing pretty much the same as I’ve been doing this year, looking around for cheap shares to add to my portfolio. I’m intrigued by these two. They’re cheaper than I would have expected.

Lloyds of London insurer Beazley (LSE: BEZ) baffles me. As a rule, shares usually look cheap after falling in value. But the Beazley share price has had a blockbuster 12 months, jumping 53.56%. It’s up 95.67% over three years.

Should you invest £1,000 in Beazley Plc right now?

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Created with Highcharts 11.4.3Beazley Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Can the share price keep flying?

Half-year results published back in August showed profit almost doubling from $366.4m to a record $728.9m. Investments and cash up 15% to $11.43bn as “favourable” financial markets boosted its investment portfolio by 4.7% to $513m.

On 6 November, the board reiterated full-year guidance despite a “volatile claims environment”, including a $175m hit from Hurricanes Helene and Milton. And here’s what may explain its low valuation.

FTSE 100-listed Beazley is on the front line of climate change, and as the storm season seems to grow wilder, those claims will keep rolling in. There’s always a risk it will take an outsize big hit. Alternatively, a stock market sell-off will hit that portfolio.

I still think it’s a ridiculously cheap with a price-to-earnings (P/E) ratio of 5.19. The trailing yield is a modest 1.73%. It’ll be on the list when I consider which stocks to add to my ISA in the New Year.

Here’s another anomaly. Insurer Hiscox (LSE: HSX) only joined the FTSE 100 in the September reshuffle, so I expected its share price to be flying as it arrowed into the blue-chip index. Yet it’s only risen 6.16% over the last year. It’s enjoyed a little bump in the last month, presumably as index trackers add it to their portfolios, but I’m a little underwhelmed.

Created with Highcharts 11.4.3Hiscox PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

It looks good value too

Hiscox has been in the FTSE 100 before, back in 2020. It took a beating in the pandemic, when it was hit with more than £350m of claims. Event cancellation and business disruption payouts triggered a £269m loss.

The board quickly reversed that in 2021 with a £191m profit. It then multiplied that to £276m in 2022 and £625m in 2023. The trailing yield of 2.7% is handsomely covered 5.5 times by earnings. That’s forecast to hit 3.4% next year, with cover still solid at four.

Hiscox specialises in small business insurance, so could struggle if next year proves tough for the UK economy. Fortunately, it has exposure to the US and Asia too.

It’s very cheap, with a P/E ratio of 6.73 times. Again, climate change risk may explain that. It took a $75m hit from Hurricane Milton. Yet I think today’s low valuation is an exciting opportunity, and I’ll consider adding this value stock to my ISA before the April deadline.

Should you buy Beazley Plc shares today?

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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.

Harvey Jones has no position in any of the 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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