Down 29%, here is one of my cheapest FTSE 100 stocks for November

I FTSE 100‘up a healthy 7% by 2024 as UK equity sentiment improves. But not all British blue-chips have had a happy ride since the start of the year.

B&M for European Value Retail‘s (LSE:BME) has fallen by more than a quarter in value so far this year.

I would not rule out further share price weakness until the end of the year or even 2025. But as a long-term investor, I will consider buying it the next time I have money to invest.

Here is the reason.

A fallen angel

A 29% drop in share prices by 2024 has pushed B&M’s price-to-earnings (P/E) ratio to 10.5 times. This is well below the FTSE 100 average of 15 times. And it is a lot that I believe is very low.

Investors were alarmed in June by the retailer’s failure to provide guidance for this financial year (until March 2025). And it has failed to bounce back since, with the latest results showing a 3.5% drop in like-for-like sales from April to June.

I believe the scale of the sale’s impact is hard to justify. B&M has reached the high end of its forecasts for the last financial period. And it looks set to continue delivering strong growth as its lucrative expansion plan continues.

Growth plan

Today, B&M sells its discount product ranges from 755 stores. That’s up from 499 back in 2016. During this time, both sales and earnings increased, as the charts below show.

Given this success, it is perhaps not surprising that B&M is accelerating its growth plan.

Earlier this year it announced “The new, long-term goal is for no fewer than 1,200 B&M UK stores, a significant increase from the 950 we were targeting previously.“.

It plans to cut the ribbon on another 90 stores over the next two fiscal years alone. This could take the group’s revenue growth to the next level.

There is always the risk that a company will expand too quickly, wiping out shareholder value in the process. But encouragingly, B&M has a great execution history that continues today.

In July he said “all stores that have opened since last year are operating ahead of expectations“.

More to come

I can see why investors are very nervous about B&M going forward. Competition is intensifying, especially as inflation eases and consumers turn to higher-end users.

This has had an impact on the retailer’s trading recently. However, the company’s sales decline of 3.5% in the first quarter should also be seen in the context of a strong comparison to the previous year. Meanwhile, corresponding revenue jumped 9.2% year over year.

It will have to row very hard to keep the growing profits going forward. But I am confident that B&M – whose share price is up 67% since 2016 – can continue to deliver excellent shareholder returns as the expansion grows.