I’m eager to purchase some low cost shares for this 12 months’s Shares and Shares ISA, and puzzled if AI may assist. And I’ve fiddled round with ChatGPT sufficient to know its limitations, however was curious to see what it might throw at me.

I’ve made a behavior of snapping up low cost FTSE 100 shares, notably these paying excessive dividends. So I shouldn’t have been shocked to see ChatGPT advocate two shares I already personal. However I used to be.

AI sees life in Authorized & Common shares

The primary was Authorized & Common Group (LSE: LGEN). I purchased the insurer and asset supervisor on three events in 2023, when it actually was low cost, with a price-to-earnings (P/E) ratio of six or seven. ChatGPT stated it’s low cost right this moment, quoting a P/E of 9 occasions.

This highlights the primary downside of utilizing a robotic to pick out shares. ChatGPT doesn’t at all times land on the newest information. Authorized & Common’s P/E has shot up to 33 occasions. That follows two sharp, successive drops in earnings per share, from 34.19p to 12.84p in 2022, then to only 7.35p final 12 months my figures, not ChatGPT’s). So it’s not low cost.

The Authorized & Common share price is up simply 0.75% over the past 12 months, and a pair of.4% over 5. At the very least it’s remained regular over latest unstable weeks.

This implies it has defensive grit and it presents one good attraction – an enormous trailing yield of 8.25%. Which ChatGPT highlights. It may hardly miss it.

My barely unreliable robotic buddy additionally stated Authorized & Common “benefits from an ageing UK population and growing demand for retirement solutions”, however has “underperformed recently due to bond market volatility and interest rate uncertainty”.

No arguments with that. AI additionally warns of “regulatory challenges” but it surely at all times does that.

I feel Authorized & Common continues to be value contemplating for earnings seekers. It may very well be in demand when rates of interest fall, and money and bond yields head south. However administration must drive these earnings.

Taylor Wimpey shares look good worth

ChatGPT’s second low cost UK inventory choose was housebuilder Taylor Wimpey (LSE: TW). It highlighted a P/E of round eight however I’m seeing 13.3 occasions. Oh effectively, it’s nearer than the final one.

I purchased Taylor Wimpey in 2023 at round six or seven occasions earnings, and my shares had been up 40% in brief order. Markets thought housebuilders would profit from Labour’s plans to construct 1.5m properties in 5 years. Improper.

The Taylor Wimpey share price is down 18% over 12 months and 42% over 5 years.

As ChatGPT notes: “Housebuilders have struggled due to high mortgage rates affecting affordability”, whereas sticky inflation has pushed up materials and labour prices.

I’d add that Funds-linked Nationwide Insurance coverage and minimal wage hikes, due in April, will add to the price burden.

Once more, Taylor Wimpey ought to get a carry when inflation and rates of interest present significant falls. That ought to increase gross sales and costs, reduce prices and additional tempt buyers by slashing returns on money and bonds. With a trailing yield of 8.3%, Taylor Wimpey ought to make hay when that joyful situation lands. Persistence required.

It’s nonetheless effectively value contemplating, for earnings seekers who can stand a spot of short-term danger. I’ll maintain twiddling with ChatGPT (sceptically), and hope subsequent time it suggestions some low cost shares I don’t personal.