Should you buy these 3 dirt cheap ASX shares?

The average price-to-earnings ratio of the Australian share market is currently 17.4x earnings. This is reasonably higher than its historic average, hence why some investors believe the market looks overvalued.

Whilst some shares do admittedly look expensive, others look dirt cheap. Three shares which stand out as being cheap presently are listed below. Should you buy them?

Greencross Limited (ASX: GXL)

With its shares close to a 52-week low and changing hands at a little over 13x annualised earnings, I think Greencross could be worth taking a close look at today. While concerns over the weak retail environment and the potential impact Amazon will have on its retail business have weighed heavily on its shares, I believe they have been largely oversold. It appears directors at Greencross feel the same way as well. Last week several directors acquired shares in the company on market.

iSentia Group Ltd (ASX: ISD)

The shares of this media monitoring company have fallen a whopping 37% year-to-date, leaving them trading at just 10x trailing earnings today. Whilst this is arguably dirt cheap, the disappointing underperformance of its content marketing segment continues to be a concern. The recently acquired King Content business is expected to make a loss this year, negatively impacting the strong performance of its core business. I would suggest investors hold off an investment until King Content is profitable.

TPG Telecom Ltd (ASX: TPM)

The last 12 months have certainly been tough for telco shares. Concerns over NBN margins and increased competition has led to an extraordinary sell-off in the sector. This has left TPG Telecom’s shares changing hands at 14x trailing earnings and providing a trailing fully franked 2.8% dividend. Whilst it isn’t necessarily my first pick of the industry, it certainly does jump out as being a potential bargain buy. Especially with the long-term growth potential from its move into mobile.

Finally, I think this fourth share is also dirt cheap and worth checking out. Especially with its huge fully franked dividend that yields almost 6% at present.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Greencross Limited and TPG Telecom Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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