These FTSE 100 shares slumped as worries over global banks intensified last week. Is now the time for me to buy them for my UK stocks portfolio?
B&M European Value Retail
Last week’s share price drop leaves B&M European Value Retail (LSE:BME) trading on a forward price-to-earnings (P/E) ratio of just 12.5 times. I think this is great value given its robust earnings outlook.
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Discount retailers like this are benefiting from the growing strain on shoppers’ wallets. Latest financials from B&M in January illustrated “strong momentum”, according to chief executive Alex Russo. Back then it announced a 6.4% increase in like-for-like revenues.
Fresh retail data suggests that trading could continue to impress. The Office for National Statistics’ latest report showed total workers’ pay fell 3.2% in real terms between November and January. This was the biggest decline for 14 years.
Inflation continues to sap the amount of cash consumers have to spend. And the problem could persist for longer than anticipated as the banking sector wobbles. In this climate the Bank of England may be reluctant to raise rates in an effort to keep financial markets stable.
But forget about the boost B&M is receiving from current economic conditions. Value for money has been a growing consumer priority over the past decade. And it’s a trend that’s tipped to keep on rolling.
High labour and energy costs are a danger to the company’s profits. But on balance I still expect profits here to grow strongly over the longer term. With any spare cash to invest I’ll be looking to add the firm to my portfolio.
Taylor Wimpey
Business at housebuilders like Taylor Wimpey (LSE:TW.) has been battered by rising interest rates and dipping buyer confidence. Yet some key market data suggests the tide could be turning. Could now be the time to for me to invest?
Earlier this month Taylor Wimpey said that “trading has shown some signs of improvement” compared to the final quarter of 2022. In fact it’s one of several builders to announce a pick-up in sales activity in this year.
Latest research from Halifax also suggests that demand may be in recovery. Its leading house price report showed house prices rose 1.1% in February, breaking a run of two consecutive monthly drops.
Lower mortgage rates have boosted homebuyer appetite of late. And they could continue to get better if the Bank of England holds off on further interest rate rises.
Yet there are still major issues facing Taylor Wimpey and its peers. While B&M might benefit from weak economic conditions, housebuilders famously suffer when times get tough. Recent data is somewhat encouraging but still remains largely mixed.
I’m not tempted to increase my stake in Taylor Wimpey just yet. But I’ll be keeping a close eye on key industry data with a view to boosting my holdings. The company’s juicy 8.4% dividend yield deserves serious attention, in my opinion.
