A stock market crash feels like it’s just around the corner. But in this situation, things can get better as well as worse.
That’s why I think investors should be actively looking for opportunities right now. And there are plenty of big discounts around.
Discounted discounts
Anyone waiting for discounted stocks doesn’t need to look past the FTSE 100. Shares in 3i (LSE:III) just fell 19% in a day.
The company is a private equity firm that’s been a huge winner in recent years. But it’s fallen sharply for one key reason. It has a very concentrated portfolio. And its key subsidiary – a discount retailer called Action – had faltered recently.
Like-for-like sales growth is slowing. The latest update includes a forward expectation guide for between 4% and 5%. That’s a sharp fall from 6.2% in 2025. And it’s a huge decline from the 10% increase the firm reported in 2024.
Private equity
With a publicly-traded company, slowing growth usually gets reflected in its share price. But Action isn’t publicly traded.
This means 3i assigns it a valuation on its balance sheet. And they have the business marked at an EBITDA multiple of 18.5. That’s extremely high for a retail operation. And it might be justified if like-for-like sales growth is going to be close to 10%.
At 4%, however, it looks like a stretch. So the market reflects this in the only way it can, which is by discounting 3i shares.
That’s why the stock fell sharply. But the latest move means investors might be underestimating Action’s growth potential.
Growth potential
Ordinarily, like-for-like sales growth is a good measure to use in evaluating retailers. But Action is an unusual case.
Most publicly traded retailers are somewhere near saturation. In other words, they’re not opening many more stores. That means changes in like-for-like sales are a good indication of long-term growth. With Action, however, things are different.
The firm has plans to more than double its existing store count. And it also has ambitious US expansion targets from 2027. That won’t be straightforward. But there are still plenty of opportunities across Europe, where it already has a strong presence.
An opportunity
In its latest update, 3i reported that its book value had increased to £30.17 per share. But the current share price is 22% below this.
This means investors who buy the stock today aren’t paying an 18.5 EBITDA multiple for Action. The real multiple is more like 14.5.
Given the retailer’s future growth potential, I don’t think that’s unreasonable at all. And it’s an extremely rare opportunity for investors.
Source: Fiscal.ai
Chances to buy 3i stock at a discount to book value in the last 10 years have been few and far between. But during that time, the share price has climbed 411%.
I think there’s more to come from both Action and 3i. So that’s why I’m looking to add to my investment with the stock down.
Finding stocks to buy
There’s a lot going on in the stock market right now. But it’s somehow managed to avoid falling into crash territory (so far) in 2026. Despite this, 3i shares are down 27% since the start of January. And regardless of what happens next, that’s enough of an opportunity for me.
