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P/E ratios of 10 times! I think these FTSE 250 bargains are brilliant ISA buys

The FTSE 250 continues to snake away from March’s multi-year lows. But there remain plenty of top bargains for ISA investors to be tempted by, many of which trade inside the long-accepted bargain P/E ratio benchmark of 10 times and below.

Gold miner Petropavlovsk is one share that trades around these rock-bottom levels. Its share price has rocketed 30% over the past three months yet it still trades on a forward earnings multiple of 6.5 times. It’s a reading that provides scope for more meaty price gains given the bright outlook for bullion prices.

It hit a fresh seven-year peak above $1,760 per ounce just last week. It looks set for additional advances as Covid-19 news flow keeps investors nervous and US-Chinese relations sour too. Over a longer time horizon, it looks like a landscape of low, low interest rates should keep safe-haven gold well bought as well. Buying shares in Petropavlovsk is one great way to ride this theme.

Another ISA contender

Huge question marks hang over the health of the housing market in the near term. With the economy expected to go for a bath this is no surprise, in turn smacking the purchasing power and the confidence of potential homebuyers. Many mortgage lenders have also started asking for higher deposits from buyers as they hunker down.

This doesn’t affect the long-term profits outlook for brick manufacturer Forterra (LSE: FORT) though. Britain’s homes shortage is well established and requires drastic action to solve. It’s why the government plans to build 300,000 new homes each year. People still need a place to live, of course. And once the economy begins to eventually improve, it will release plenty of pent-up first-time-buyer demand, encouraging builders to ratchet up their production plans again.

At current prices, Forterra changes hands on a P/E ratio of just 9.7 times for 2020. This, in my opinion, makes it a top value buy for ISA investors.

A house being constructed in the countryside

Toe the line

I reckon Direct Line Insurance Group (LSE: DLG) is another great buy for bargain-loving ISA investors. It trades on a prospective P/E multiple bang on the value watermark of 10 times.

Insurance companies are traditionally considered to be brilliant safe havens, sure. But this particular FTSE 250 share hasn’t had everything its own way. It will take a £44m hit due to the Covid-19 crisis supercharging claims at its Travel division. It will also incur £70m of costs by giving cash-strapped customers assistance and delaying redundancies.

Things are not all bad, however. Claims at its core Motor unit had sunk by 70% in April because of lockdown measures. The likelihood that some form of quarantine will remain in place until well into the summer means that low-than-usual claims costs can be expected for some time too. And many analysts expect that this will more than wipe out the extra costs it’s incurring.

But don’t just buy Direct Line on account of its likely resilience in these tough economic times. The rate at which its own-brand policies are growing makes it an exciting ISA buy for the years ahead, too I’d happily buy it for my own stocks portfolio.

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Royston Wild 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.