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Our monthly Ice Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of income-focused Ice recommendations, to help Fools build out their portfolios.
“Best Buys Now” Pick #1:
B&M European Value Retail (LSE: BME)
- B&M continues to go from strength to strength in the quarter just ended. After falling in Q1 as the business lapped a tough comparative period revenue growth rebounded strongly to 6.3% in Q2.
- That brought total H1 revenue growth up to a respectable 1.8%. While super-charged pandemic era profitability is ending, the business also remains hugely profitable for a retailer. Operating profits of £249m during the six months to 24 September represent an impressive margin of 10.8%.
- In a competitive, generally low margin sector that level of profitability points to how adept management have been at maximising same store sales growth and keeping a tight lid on costs.
- To date this industry-leading profitability has created a virtuous circle as higher profits allow for re-investment in further price competitiveness that leads to even more sales growth from cost-conscious customers.
- Importantly as an Ice share, B&M provides an attractive level of income with the 2.6% yielding ordinary payout supplemented by semi-regular special dividends. With leverage already low going into the crucial a golden Quarter and management hinting that cash flow should be strong again, we expect another special dividend to be announced early next year.
- B&M isn’t dirt-cheap at about 16x trailing earnings. But with great growth prospects and huge cash flow that is being both re-invested to generate more growth and returned to investors, we think it’s worth taking a closer look at in December.
“Best Buys Now” Pick #2:
Redacted
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