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2 dirt-cheap stocks that could fund your retirement

Buying shares with wide margins of safety seems to be a sensible move at the present time. Although the stock market is at a record high, there are nevertheless a number of major risks facing investors. For example, political risk in the US remains relatively high, while Brexit talks and the outcome of the General Election could also affect valuations in future. With that in mind, here are two shares which offer low valuations and upside potential.

Tough outlook

Reporting on Friday was publishing company Johnston Press (LSE: JPR). Its trading update for the 17 weeks to 30 April showed that conditions have been as expected, with the company on track to meet guidance for the full year.

Its total revenue for the period was 0.2% higher, while digital advertising revenues moved 10% higher. Its on-network digital audience grew by 11% to 26m, with average page views up 17%. Furthermore, the acquired i newspaper continues to perform well, with sales volumes up 4% in the 12 months since acquisition.

Despite this, the company’s future looks challenging. Trading conditions for regional newspapers in the UK remain tough, as more consumers switch to online editions. They potentially offer lower revenue per reader than print editions, which is a key reason why Johnston Press is expected to record a fall in its bottom line of 27% this year, followed by a further fall of 13% next year.

However, with the company having a tight control on costs and a digital platform which is performing well, its long-term outlook remains relatively positive. Since it trades on a price-to-earnings (P/E) ratio of just 1.2, it seems to offer a wide margin of safety. Therefore, it could be worth buying right now.

Income potential

Sector peer Trinity Mirror (LSE: TNI) also faces a difficult outlook as consumers switch from print to digital. Its bottom line is forecast to fall by 10% this year, and by a further 1% in the following year. However, the market seems to have factored this difficult outlook into the company’s valuation. Trinity Mirror trades on a P/E ratio of just 3.2, which suggests its shares could move higher in the long run.

As well as capital growth potential, Trinity Mirror could be a surprisingly strong income play. Certainly, its earnings outlook is unstable and it lacks resilience, but with dividends representing just 17% of profit they seem to be highly sustainable at their current level. Since Trinity Mirror currently yields 5.2%, it could prove to be an attractive means of generating a high income return.

Looking ahead, the shift to digital looks set to continue. Therefore, it would be unsurprising for investor sentiment towards Trinity Mirror to become more downbeat. But given the potential for growth within digital in the long run and its high dividend yield, it could prove to be a sound investment for less risk-averse investors.

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Peter Stephens has no position in any 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.