I believe FTSE 100 stocks have never looked so appealing. One stock I like the look of is B&M European Value (LSE: BME).
What’s happening with FTSE 100 stocks?
Tragic geopolitical events and gloomy economic news are what I’m met with when I turn on any news channel or scroll through the newsfeed on my phone.
The by-product of recent conflicts and macroeconomic issues has been market volatility.
Soaring inflation, rising interest rates, and a cost-of-living crisis have hampered global and UK markets. Other issues include fears of a stock market crash, a financial crash, and even a housing market crash.
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Taking all this into account, there are a number of stocks that have fallen but look like potential opportunities. However, some FTSE 100 stocks have still done well due to their fundamentals, offering, and market position.
B&M investment case
B&M is one of the FTSE 100 stocks I mentioned earlier that has actually done well in the face of the recent headwinds.
As I write, B&M shares are trading for 580p. At this time last year, they were trading for 283p, which is a mammoth 103% rise over a 12-month period.
You might be wondering why I’m bullish on B&M shares despite its soaring share price. Well, I believe the business can continue to soar. Plus, if it can perform like this during a downturn, there’s potential for it to flourish when things turn around, in my opinion.
So why has B&M done well? I believe the discount retailer’s offer appeals to wallet-conscious consumers out there. After all, the cost-of-living crisis has the majority of us looking to make our budgets stretch further. Plus, it has a unique and growing market presence. It carries well-known branded products, which it sells for around 15% less than competitors. Furthermore, due to selling branded names, it’s not in direct competition with supermarket disruptors Aldi and Lidl.
B&M’s most recent trading update was pleasing, where it announced a 13% revenue growth compared to the same period last year. Furthermore, a dividend yield of 6% is enticing and well above the FTSE 100 stocks average of 3.8%. However, I understand dividends are never guaranteed.
Finally, B&M has capitalised on the collapse of discount retailer Wilko, and snapped up 51 of its stores. This growth could push the business to new levels.
Risks and final thoughts
One of the biggest issues for B&M is that its margins tend to be tight. This is not uncommon for discount retailers. However, tight margins can impact profitability which underpin growth and shareholder returns. Soaring inflation won’t help here.
Finally, B&M shares are nearing all-time highs. Any negative trading or other issues could send the shares tumbling.
To conclude, I’d buy B&M shares when I next have some cash to spare. It’s one of a number of FTSE 100 stocks that look too good to miss out on to me. If the market turns around, I’d expect the shares to continue their impressive upward trajectory and provide consistent returns.
