I believe B&M European Value Retail (LSE:BME) is one of the best stocks I can buy now on the FTSE 100. Should I add it to my portfolio?
FTSE 100 opportunity
Commonly referred to as B&M Bargains or B&M Homestore, B&M attracts over four million customers each week. With over 685 locations, it employs more than 35,000 staff. It is known as a top discount retailer and such stores have risen in popularity in recent years. Consumers are looking to make their cash go further which benefits retailers like B&M.
My best stocks to buy now possess defensive traits. Retailers that provide essential goods such as food and home goods are the type that consumers will patronise regardless of economic conditions. B&M falls into this bracket in my opinion.
As I write, shares in B&M are trading for 564p per share. At this time last year, shares were trading for 482p per share. This means in the past 12 months its share price has increased by 17%. Since the beginning of this year, shares have risen nearly 10% from 516p per share to current levels. At current levels I believe it a good FTSE 100 opportunity.
Performance
B&M’s annual report for the year ending 31 March 2021 released in June made for good reading. Group revenue increased by nearly 26% and cash generated increased by 75% compared to full-year results for 2020. In addition, profit increased by a huge 108% and earnings per share also increased by 119% compared to 2020 levels. Furthermore, B&M continued its expansion as it continued to open new locations throughout the year despite disruption and economic uncertainty caused by the pandemic.
Last month, B&M released its Q1 trading update. This also made for positive reading as group revenues continued on an upward trajectory compared to the same period last year. Revenue was up 3.1%. In addition, it saw a hike in demand for home and garden products which helped boost revenue. Furthermore, it continued to open new stores throughout the quarter.
I believe the best stocks to buy now on the FTSE 100 perform consistently and show ambitious long-term growth plans despite difficult market conditions and economic uncertainty. This is one of the reasons I like B&M.
The best stocks to buy now have risk too
B&M faces the threat of the UK distribution and supply chain disruption affecting many other retailers right now too. The demand for logistics and haulage services is outstripping the weakening supply linked to Brexit and a decrease in labour available. If deliveries aren’t met and goods do not hit the shelves, B&M’s financials could be affected.
In addition to this, B&M could see its sales figures and profitability affected if consumer spending weakens. As well as essential goods, B&M sells a lot of discretionary goods too. If consumers only spend on essential items, its bottom line could be affected.
Overall I believe B&M is one of the best stocks to buy now on the FTSE 100. It has a good track record and has continued to perform consistently. It is also expanding its reach and growing, which is pleasing from an investment perspective. I would happily add B&M shares to my portfolio at current levels.
