At a 52-week low, this FTSE 100 stock looks like a big opportunity

Discount retail is a big theme for investors at the moment. And the FTSE 100 has one of the best in the industry at a bargain price right now.

| More on:
Young female analyst working at her desk in the office

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in FTSE 100 discount retailer B&M European Value (LSE:BME) have fallen 13% since the start of the year. At today’s prices, the stock looks like a bargain.

The company is growing well, has a strong competitive position, and trades at a compelling valuation. That’s a combination that could produce strong returns for investors.


Retailers can grow in two ways. One is by opening more stores and the other is by finding ways to generate higher profits from their existing outlets. 

At its most recent trading update, B&M announced revenue growth of 10% compared to the previous year. And around two-thirds of that came from opening new stores. 

Part of this has been the business taking advantage of a short-term opportunity. Wilko going into bankruptcy gave B&M a chance to acquire some of its units at bargain prices. 

The company is expecting to roughly double its store count over the long term. So there should be plenty of scope for future growth from an expanded number of outlets.


B&M shares trade at a price-to-earnings (P/E) ratio of around 13. That’s significant for a couple of reasons.

First, it’s pretty much in line with the average for the FTSE 100. So in terms of the index, I see this as a better-than-average business trading at an average price.

B&M European Value P/E ratio 2015-2024

Created at TradingView

Second, it’s low by the company’s historical standards. The stock has generally traded at a higher multiple over the last decade, making it a relatively good time to consider buying. 

On top of this, the company’s growth means today’s prices represent a forward P/E ratio of 12. All of this means I think the valuation looks unusually attractive at the moment. 


The big risk with retail is competition. The likes of Lidl and Aldi are fierce competitors and there’s virtually nothing companies can do to stop customers hunting the lowest prices.

It’s worth noting, though, that this has been the case for some time. And B&M has managed to maintain strong profitability levels.

Operating Margins B&M vs Tesco

Created at TradingView

Over the last 10 years, the company has consistently maintained operating margins above 10%. That’s more than double what Tesco has achieved during the same period.

That’s an indication the company has a strong competitive position. And this is the kind of thing that makes a stock a good long-term investment. 

Buying opportunities

B&M looks like a resilient business with good prospects for future growth. And it’s trading at an unusually good price at the moment.

That could be a winning combination for investors. The stock doesn’t get the attention it deserves, but that’s often where the best opportunities come from.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value and Tesco Plc. 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.

More on Investing Articles

Investing Articles

2 mouthwatering FTSE growth stocks I’d buy and hold for 10 years

Growth stocks purchased today could be the gateway to many years of capital growth and returns. Here are two picks…

Read more »

Investing Articles

Can the IAG share price really be as dirt cheap as it looks?

While most shares have recovered since the Covid days, the IAG share price is staying stuck to rock bottom. Surely…

Read more »

Investing Articles

BAE Systems shares are flying! Have I missed the boat?

Sumayya Mansoor looks into whether or not BAE Systems shares are still a good buy for her portfolio after the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

1 heavyweight FTSE 100 share I’d buy as London retakes its crown

Some Footsie firms are extremely large, but that doesn't mean they couldn't get even bigger. Here's one such FTSE 100…

Read more »

Investing Articles

I’d buy 5,127 National Grid shares to generate £250 of monthly passive income

With a dividend yield of 6.5%, Muhammad Cheema takes a look at how National Grid shares can generate a healthy…

Read more »

Investing Articles

The FTSE 100’s newest member looks like a no-brainer to me!

This Fool explains why she sees the newest member of the FTSE 100 as a great opportunity after its recent…

Read more »

Investing Articles

Empty Stocks and Shares ISA? Here’s how I’d start earning a second income from scratch

Like the thought of earning extra cash tax free? Our writer explains what he'd do to begin earning passive income…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

No savings at 25? I’d start by investing £3k in these 3 red-hot FTSE 100 shares

Harvey Jones thinks these three FTSE 100 stocks would be a great way to kickstart a portfolio of UK shares.…

Read more »