1 cheap share I’d buy now in my Stocks and Shares ISA

There are many cheap stocks today due to recent geopolitical and economic events. And last year’s weak stock market created some great looking investment opportunities for my Stocks and Shares ISA.

One thing I would like to mention is IG design (LSE: IGR). The company describes itself as a “lead” manufacturer of gift packaging and products for celebrations, gifts, stationery and creative toys.

International operations

In the trading year to March 2022, about 69% of the proceeds came from America and 12% from the UK. Turnover still comes from other countries in the world. So IG Design has a thriving international business with an emphasis on America.

But as expected, operations have a lot of cycles. And this is causing problems along with reported public supply chain difficulties.

I last wrote about the company in November 2019. Back then, the business was growing and growing like crazy. And I reported the share price at 639p. But today, it is in the ballpark of 153p. So what’s wrong?

The answer to that question is income. The pandemic and other economic challenges have caused the company’s profits to decline. And the share price also fell. Since its peak in January 2020, the stock is now down 78%. Therefore, it is cheap in that sense.

But the business has transformed itself. And stocks have responded well. For example, in the past year, the stock has risen by just over 40%. But the company has the potential to do well in the coming years and rebuild its earnings.

Business has changed

The half-year results last November were encouraging. Revenue for the six months to September 30 increased by 8% year-on-year. And there is “better profit and margin recovery”. Directors said they were expecting full-year results “further ahead”.

City analysts have pegged a massive earnings recovery of around 580% for the trading year to March 2024. But even with that, earnings are still only around a quarter of what they achieved in the year to March 2019.

Meanwhile, in the forward-looking earnings some adjust to the estimate of around 15. And the price of my attack is fair rather than cheap. However, if IGR is able to rebuild earnings somewhere near their previous levels, the current valuation could be low. But a positive result is not guaranteed. So I recommend this stock not for widows and orphans, despite the potential of the business to recover and grow.

But new chief executive Paul Bal will take over on April 1. And he has been the chief financial officer (CFO) since March 2022. But before that he was the CFO at Stock Spirits where he “It was instrumental in the turnaround of the then LSE-listed group”.

However, even with a new management team, positive results are not certain. And one thing investors should be wary of is the huge debt load the company is carrying.

However, I am optimistic about the multiyear outlook for IG Design. And although I already hold some stocks, I’m thinking about adding to my stocks and shares ISA.