Analysts are always looking for cheap ASX shares that could make smart buys. There are a few that value investors may really like.
Businesses that are valued at a low multiple of their projected earnings could turn out to be undervalued. If those supposedly cheap businesses pay a dividend, they could also be attractive options for a flow of dividend income.
With that in mind, here are two cheap ASX shares with low price-to-earnings (P/E) ratios.
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Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop describes itself as a specialty retailer of male and female personal grooming products and aspires to be the market leader in "all things related to hair removal". It has around 120 owned and franchised stores across Australia and New Zealand. The company is also looking to grow its oral care sales.
The FY22 half-year dividend was increased by 40.6% to 4.5 cents per share. The significant increase in the dividend payout ratio reflects the desire of the ASX share's board to continue to maximise returns to shareholders while maintaining balance sheet strength and flexibility during this period of variable trading conditions.
After store closures in the first half of FY22, the company is experiencing stronger sales growth in the second half. In the second half of FY22 to 17 February 2022, total sales were up 6.2%, including 23.8% online sales growth.
The online store is reportedly going from "strength to strength", with increasing site visitation, elevated conversion, and high average transaction values. Active online customers increased almost 50% to 650,000 in the 12 months to 31 December 2021. Management said this presented an exciting opportunity to turn these into loyal, repeat customers in the future.
The cheap ASX share is currently rated as a buy by Ord Minnett, with a price target of $1.30. At the current Shaver Shop share price, it is valued at under 9x FY23's estimated earnings with a projected FY23 grossed-up dividend yield of 12.4%.
Inghams Group Ltd (ASX: ING)
Inghams describes itself as the largest integrated poultry producer across Australia and New Zealand. To put a number on how much poultry that company produces, Inghams produced 237.1kt of core poultry volume in the first half of FY22 (which was 5.6% higher than the prior corresponding period).
The business is currently rated as a buy by the broker Credit Suisse with a price target of $4.05. That implies a possible upside of more than 30% over the next year. Credit Suisse's estimates put the current Inghams share price at 11x FY23's projected earnings.
Credit Suisse has also pencilled in a dividend estimate which equates to a grossed-up dividend yield of almost 9% for FY23 for the cheap ASX share.
As mentioned, Inghams is seeing long-term growth of its poultry volumes, which is helping grow revenue and profit. The FY22 half-year result saw underlying net profit after tax (NPAT) increase by 5.9% to $39.7 million.
The company is working on a number of operational efficiency programs to improve the operations and profitability of the business.
