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2 shares I think are screaming buys

When looking at some of the biggest share price falls over the last six months or one year, many of the companies that are near the top of the worst offenders have self-inflicted problems. From poor acquisitions to profit warnings and over-indebtedness, many management teams have made avoidable mistakes.

But there do seem to be a few shares that have fallen too heavily, despite the businesses being in good shape, meaning they now appear to be offering good value. Two that particularly stand out to me are Lloyds Banking Group (LSE: LLOY) and tobacco producer Imperial Brands (LSE: IMB).

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Digital banking

I recently looked at the reasons why I liked the look of Lloyds for a Stocks and Shares ISA. I believe most of its share price decline has been caused by factors outside of the control of the bank’s management, most notably Brexit and wider fears over the UK’s and the global economy. For the record, at the time of writing, the share price decline during the last six months has been 21%.

Management is doing a good job, I feel, with the factors that are within its control. The bank is rapidly digitalising, which is cutting costs, and it is expanding its mortgage book and credit card business. Recently, Lloyds has been fending off competition to buy up the mortgage book that Tesco was offloading. This will help it keep its position as Britain’s biggest lender.

A few years ago, it also splashed the cash to buy MBNA for £1.9bn. At the time it was reported that this would give Lloyds a 26% share of the UK credit card market and bring it 7m customers.

The other thing to note for the firm is the end of PPI. This was a massive source of fines for the bank for past misdemeanours, but now cash set aside for paying out on mis-sold insurance can instead be spent on growth or returned to investors.

Offering a yield of over 6% while trading on a P/E of nine has tempted me into investing as I think the share are a screaming buy at the current price of around 50p.

Going up in smoke?

Although there may be legitimate concerns among investors around what the future holds for tobacco companies, I think they ought to be able to maintain their juicy dividends. Issues include falling smoking rates in the west and possible clampdowns in the US on vaping products.

In answer to that there is perhaps an even greater opportunity for traditional tobacco products in emerging markets; plus the potential for M&A activity (especially after recent reports that Philip Morris is in talks with Altria to create a $200bn tobacco group); opportunity in the creation of new products such as e-cigarettes; and lastly the potential of a move into the cannabis market

The share price of Imperial Brands has been hit hard in recent times and is down 17% in the year to date. This does now mean that the shares provide investors with a dividend approaching 9%, while also trading cheaply with a very low P/E at under eight.

Combined, I think the opportunities for growth, industry mergers and the combination of a generous dividend and cheap share price all make Imperial Brands look very appealing as an investment opportunity.

A Growth Gem

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Andy Ross owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Imperial Brands and Lloyds Banking Group. 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.