Looking for cheap stocks to buy? Here’s one of my favourites to consider for ISA season

Stock markets have fallen sharply in recent weeks. But on the plus side, it’s given ISA investors stacks of great cheap shares to consider buying before next month’s investment deadline.

Here’s one I think looks like a brilliant bargain.

Pawn star

Pawnbrokers like H&T (LSE:HAT) can be classic lifeboats for investors during troubled times. Demand for their credit services typically booms when consumers struggle to source money elsewhere. People also often turn to the second-hand goods they sell when inflation rises and their disposable incomes shrink.

Finally, these companies tend to deal heavily in gold, an asset which often spikes in value during tough economic periods (just today the precious metal struck new record peaks of around $3,031 per ounce).

Profits boom

These qualities were on full display when H&T released its full-year trading statement on Tuesday (18 March). Pre-tax profit leapt 10% in 2024, to Â£29.1m, due to continued strength for its core pawnbroking operations.

H&T’s pledge book — its record of loans and pawned items — leapt 26% year on year to Â£127m. The business said it enjoyed “record levels of new customers borrowing from us for the first time“.

Boosted by the buoyant gold price, H&T also saw revenues and gross profits from retail jewellery and watch sales leap 27% and 34% respectively. These came out at Â£61.8m and Â£19.3m last year.

Trading landscape

H&T’s clearly making impressive progress in these favourable times. With 285 stores, it’s the UK’s largest pawnbroker and it continues to grow market share.

Can it continue to make waves though? Even if it continues to make strong strategic progress, sales and profits could be undone by an uptick in the domestic economy that dents loan and retail demand.

Yet for the moment, trading conditions look set to remain favourable over the short term at least. This is reflected by recent GDP downgrades by the Organisation for Economic Co-operation and Development in recent hours.

The body now expects UK growth of just 1.4% in 2025 and a slower 1.2% next year. I feel estimates could be set for further downgrades too, as business confidence dives and US trade tariffs loom.

Cheap as chips

Through steady expansion, H&T remains committed to capitalise on this opportunity, not to mention drive long-term growth. It added seven new stores to its estate in 2024 and embarked on a further 48 store refits.

A strong balance sheet gives the business scope to continue investing for growth while continuing to reward shareholders with a growing dividend too. In 2024, it hiked the total payout 6% year on year to 18p per share.

For the current financial year — which H&T has changed the end date of to September — the business trades on a forward price-to-earnings (P/E) ratio of 7.1 times. With a 5.1% dividend yield too, H&T’s share price offers excellent all-round value, in my view.

Despite the threat of rising costs and a possible change in economic conditions, I think H&T shares are worth serious consideration at current prices.

The post Looking for cheap stocks to buy? Here’s one of my favourites to consider for ISA season appeared first on The Motley Fool UK.

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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.