The annual ISA season is in full swing. I don’t know about you, but my inbox is being bombarded with emails reminding me the investing deadline is almost here. Any of my Stocks and Shares ISA allowance I don’t use by midnight on 5 April is lost forever.
With a few days until the cutoff, I’m building a list of stocks to buy. I don’t have to actually purchase any shares to utilise what remains of my yearly allowance — just depositing my cash is enough to lock in that tax-free allowance. But I don’t see any reason to delay.
Why? Well recent stock market volatility means a lot of quality stocks are now trading at bargain-basement prices. They may fall in value again. Yet there’s also the chance that I’ll lose a top dip buying opportunity if I don’t jump in today.
Here are two cheap stocks I’m considering before that ISA deadline.
Forterra
Forterra (LSE:FORT) could face turbulence if the Middle East conflict rumbles on. A period of rising inflation and interest rates could have significant ramifications for its construction markets.
But at current prices of 157p, I think the brickmaker could be worth a nibble. This is because, at 0.4, its forward price-to-earnings-to-growth (PEG) ratio is well inside bargain territory of one and below.
Though there’s clear near-term risk, the outlook over a longer time horizon is a compelling one. In particular, the UK government’s plans to build 300,000 new homes a year this decade could supercharge Forterra’s profits. Following recent expansion, it has the scale to fully maximise this opportunity too (its Desford site is the largest brick factory in Europe with annual capacity of 180m clay blocks).
Forterra’s chunky 4.2% dividend yield offers an added sweetener for value investors.
Softcat
Softcat (LSE:SCT) shares have outperformed the broader stock market in recent weeks. This may come as a surprise, given the potential inpact the Middle East war could have on inflation and growth, and by extension cyclical sectors like technology.
So why has Softcat’s share price picked up steam? One reason seems to be that investors are confident the firm can successfully navigate the worst of any downturn. Despite tougher-than-usual conditions, the business lifted profit forecasts for this financial year after reporting a 33% rise in gross invoiced income. This bodes well looking ahead.
The company’s broad IT expertise is still delivering robust sales and earnings growth. But there’s another reason why the FTSE 250 share continues to rise.
Despite its recent uptick, previous price weakness means Softcat’s shares remain eye-poppingly cheap. At £12.15, the forward price-to-earnings (P/E) ratio of 16.7 times is well below the long-term average of 27-28. Could this continue to attract interest from value investors? I think so.
Full disclosure: I already hold this tech in my portfolio. However, its incredible cheapness means I’m considering increasing my own stake before the ISA deadline.
