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Investors don’t need to spend big to get high quality FTSE 250 shares. Here are two to consider with excellent long-term potential despite their low price-to-earnings (P/E) ratios.
ITV
Among improving conditions in the advertising market, ITV (LSE:ITV) may be about to overcome the horrors of recent years.
The broadcaster’s share price has fallen 55% since 2019, a period that has also been affected by strikes by writers and actors in the US.
By 2025, ITV expects advertising revenue to increase by 2.5%. That’s despite the fact that last quarter’s results will be affected by extremely strong comparisons and marketers’ confusion about the October budget.
Digital advertising revenue is particularly strong, rising 15% between January and September. This provides evidence of the great success of the company’s ITVX broadcast platform, which can be a lever for strong long-term profit growth.
I think ITV shares are worth serious consideration at current prices, trading at a forward P/E ratio of 7.2 times.
On top of this, its forward price growth (PEG) ratio is 0.6. Any sub-1 reading indicates that the stock is undervalued compared to forecasted earnings.
A transferable stake of 7.9% in ITV shares provides an additional sweetener. This is more than double the FTSE 250 average of 3.4%.
As with any stock, investing in this streaming giant involves taking some risk. It faces extreme competition from other media types, and especially from other broadcasting companies. Its sustainability may also be hampered by a long-term slowdown in the domestic economy.
However, I think the potential benefits of ITV shares still make them worth considering. And especially given their low ratings.
Bank of Georgia The group
The dangers they face Bank of Georgia (LSE:BGEO) has just woken up. This is despite the fact that the Eurasian country’s economy – and consequently, its banking industry – continues to boom.
Helped by an 11.1% jump in GDP in the third quarter, FTSE 250 banks saw lending activity rise by 18.8% in constant currencies. This is up from 17.7% in the previous quarter.
So pre-tax profit increased by 43.8% in the third quarter.
Investors are worried about the long-term economic consequences of Georgia’s political crisis on its banks. The country is facing a conflict between politicians who want better relations with Europe and those who see its future close to Russia.
But can this uncertainty now be factored into the decline in Bank of Georgia shares? I think the answer would be yes.
Today its forward P/E ratio sits at 3.3 times. This is well below the bank’s five-year closing average of 5.4 times.
The emerging market bank’s PEG, on the other hand, is a rock-bottom 0.1.
It is also worth remembering that Armenian bank operations can help solve potential problems in its home market. It gets about 22% of its pre-tax profits from Georgia’s neighbor to the south.
Since Bank of Georgia also has a dividend yield of 5.1%, I think it’s another attractive value stock to consider.
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