The stock markets fell last week after a new variant of the Covid virus was announced. It seemed a bit like history was repeating itself in miniature from back in March 2020 when the pandemic started and markets crashed. But as an investor, I was watching to see if there were any stocks to buy that are now better value.
Here are two that I think are dirt-cheap buys for my portfolio for 2022 and beyond.
The first stock to buy
The first company I’m looking at is ITV (LSE: ITV). It’s a member of the prestigious FTSE 100 index with a market value of £4.4bn as I write.
I’m sure most will know ITV given that it takes up the prime channel three spot on UK TV. It generates the majority of its revenue from advertising and subscriptions in its Broadcast division. But the company also produces its own content via ITV Studios.
The company is attractively valued in my view. On a price-to-earnings (P/E) basis, the shares are valued on a multiple of 7.3. What’s more, earnings growth is forecast at 38% this year. This is a high growth rate for such a low P/E ratio. The company said itself it has had an outstanding nine months to end its third quarter to 30 September.
ITV is showing it’s able to pivot the business to stay relevant. The company said recently that it’s accelerating towards the second phase of its digital transformation. This is driving streaming viewing and associated revenues. Online viewing was up 39% in the recent results, and video-on-demand revenue rose 54%. I think this shows that the transformation is working as streaming and on-demand TV are becoming more prevalent.
There’s still a risk of a resurgence in Covid leading to another lockdown, and more so now after the new strain was announced last week. The original restrictions in 2020 really impacted ITV’s advertising revenue and its studios.
But I think this is a dirt-cheap stock to buy for my portfolio.
A mining stock
I’ve also been researching BHP (LSE: BHP). It’s another company in the FTSE 100, but with a market value of £99bn. BHP is a global mining company, producing essential minerals such as copper, iron ore and nickel.
BHP is another dirt-cheap stock, in my view. Its share price is valued on a P/E ratio of 7.5, and again the earnings growth for this year is impressive at 23%. Even better is the huge forward dividend yield of 10%.
However, some ESG (environmental, social and governance) investing strategies consider the mining sector as ‘dirty’ and screen out businesses like BHP from investment. This may limit capital flow into the business, and then impact its share price.
I view this in a different way though. BHP’s business is critical in the mining of minerals that are needed for decarbonisation and electrification. For example, nickel is a major component in lithium-ion batteries that power electric vehicles.
Therefore, I think BHP is an excellent stock to buy for 2022 and beyond.
These could also be worth a look…
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Dan Appleby owns shares of ITV. The Motley Fool UK has recommended ITV. 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.
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