After a bumpy few months for the FTSE 100 I can see plenty of cheap shares I’d love to in 2025. Here are two I’ll seriously consider buying for my Stocks and Shares ISA once I’ve built up some cash after the Christmas splurge.
I hold a small stake in one of them already: oil and gas giant BP (LSE: BP). I bought its shares on 18 September at 411.6p thinking they were too cheap to resist, with a price-to-earnings (P/E) ratio of around six. When they fell I bought them again on 22 November at 392.7p.
Today, the BP share price is even cheaper at 383.8p. The trailing P/E is down to 5.62, while the yield has climbed to a bumper 5.82%. Yet there are valid reasons why this dividend growth stalwart is so cheap.
The BP share price is down but not out
BP shares boomed during the 2022 energy shock, after Russia invaded Ukraine, but with the oil price sliding towards $70 a barrel, that story is long played out. BP shares have fallen 18.56% over the last year.
With demand idling and supply high, oil could fall further next year. Especially if US President-elect Donald Trump opens the shale spigots. BP also has to navigate the green transition, and I’m not sure if it’s got it strategy right.
My shares are down 6% so far but I reckon I’ll get plenty of dividends and growth over the years and will consider buying more in 2025.
I don’t hold FTSE 100 bank HSBC Holdings (LSE: HSBA), but wish I did. Shares in the Asia-focused bank are up 23.19% over one year, and 73.19% over three.
The share price is smashing it
Better still, it has lavished loyal investors with share buybacks and dividends. It can afford to be generous, after posting a bumper reported profit before tax of $30.3bn in 2023. That was up 78% on the previous year, so it’s growing rapidly too.
I’m astonished to see the shares also look cheap, with a P/E of just 8.22. The trailing dividend yield is a mighty 6.51%. Like BP, that’s way above the average FTSE 100 yield of around 3.5%.
The main reason HSBC shares look cheap is that investors fear it will get caught up in US-China trade wars. I see that as a legitimate concern. In fact, that’s the reason I didn’t buy HSBC shares before.
That threat is likely to magnify under Trump, as if threatens 60% import tariffs on Chinese products. That doesn’t spook me too much as HSBC makes less than 10% of its sales in the US and services may be exempt anyway.
The ailing Chinese economy is a bigger worry, and I don’t see Beijing turning that around quickly. It still hasn’t held HSBC back.
Given today’s low valuation and high yield, I think HSBC is a top stock to consider buying in 2025. I do love a January bargain. Now let’s see how much cash I have to invest after the seasonal festivities have drained my account.
The post 2 filthy cheap shares I’d love to buy in an ISA in 2025 appeared first on The Motley Fool UK.
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More reading
Down 29% to under £4 and with a P/B of just 1.2, is BP’s share price a must-buy opportunity for me?
Is BP’s 6.7% dividend yield good value after the recent share price fall?
Here’s the HSBC share price forecast through to 2026
Based on these oil price forecasts, the BP share price could have a tough 2025
2 lessons from the HSBC share price soaring 159% in four years
Harvey Jones has positions in Bp P.l.c. The Motley Fool UK has recommended HSBC Holdings. 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.
