Every year I try to use up the full allowance for my Stocks and Shares ISA. And with the April 5 deadline just days away, I’ve been hunting for cheap stocks to add to my portfolio.
Russia’s invasion of Ukraine caused volatility in the stock market. And while many shares and sectors have since recovered from February’s collapse, there are still bargains to be had. But of course, Ukraine isn’t the only issue impacting stocks. There’s also inflationary pressure weighing on share prices, among other things.
The two stocks I’m looking at today are Bank of Georgia (LSE:BGEO) and Burberry (LSE:BRBY). I actually bought both of these stocks in March 2020 as Covid caused the market to crash. I’m generally a long-term investor, but I ended up selling them around a year later for a handsome profit, so I think of them both fondly.
Today, both of these stocks are trading at a considerable discount again. And I think they would make a good addition to my Stocks and Shares ISA with a much longer holding period this time.
Bank of Georgia
The Bank of Georgia share price was hit hard by Russia’s invasion of Ukraine. Despite a recent surge, the share price is still at a 27% discount compared to three months ago.
Even prior to the invasion and ensuing price collapse, I thought the Bank of Georgia was cheap. The stock has a price-to-earnings ratio (P/E) — which measures its share price relative to its earnings per share (EPS) — of just 3.2.
Last year, the company posted a pre-tax profit of £192m. The figure was more than double the Bank of Georgia’s performance in 2020, and even substantially above pre-pandemic results. These profits were posted by a company with a market cap of just £575m.
Despite the positive fundamental data, I appreciate the share price is heavily linked to the Georgian economy and perceived risks. But yesterday, the National Office for Statistics in Georgia posted some very positive results. The country’s economy grew by 14.6% year-on-year, while average real GDP growth was equal to 16.3% over the year.
It’s also worth noting that Georgia is not imposing sanctions against Russia due to fear of reprisals, but said it’s in full compliance with the financial measures imposed by the international community.
Burberry
The Burberry share prices has fallen considerably over the past year, from a year high of £22.67 to the current £16.75. There are a number of reasons for this. Closing shops in Russia after the invasion, inflationary pressure, a change of leadership and economic turmoil in China have all weighed on the stock.
But the falling share price belies some positive performance data. In 2021, the company posted its best pre-tax profits in the last five years. The £490.2m profit was far in excess of the £168m made in 2020. It reflected an increase in consumer and business activity following the lockdowns of the year previous.
Furthermore, although luxury goods can suffer as prices rise, I don’t think this applies to ultra-luxury fashion. Consumers, particularly high-wealth individuals, are often willing to pay whatever’s asked to get what they want.
Personally, I think both of these stocks would be a good buy for my portfolio and I’ll be looking to add them soon.