Recently, I have been looking for cheap FTSE 100 growth shares to buy for my portfolio. I have been looking out for stocks that are not necessarily the most attractive growth investments.
Instead, I have been focusing on shares I believe fly under the radar for the rest of the market, as these companies may have more potential. Here are three FTSE 100 growth stocks that I would buy today, based on their potential.
FTSE 100 distribution champion
The first company is the distribution and support sales group DCC (LSE: DCC). Over the past couple of years, this corporation has expanded via a combination of growth and acquisitions. Earnings per share have increased at a compound annual rate of 11% since 2016.
However, as this is not an exciting tech business, the market seems to be overlooking its potential. The stock is trading at a relatively attractive forward price-to-earnings (P/E) multiple of just 13.6. I think that undervalues the FTSE 100’s growth outlook for the next few years.
As we advance, some challenges it could face include competition and higher interest rates. Rising rates could make the company’s debt more expensive and reduce profit margins.
Growth and income
Another FTSE 100 growth stock I would acquire for my portfolio today is ITV (LSE: ITV). This is a company the market loves to hate. Even though the corporation has told investors it expects to report a record sales performance for the second half of 2021, the stock is still trading at the same level it was this time last year.
I believe this presents an opportunity. At the time of writing, shares in the broadcaster are selling at a forward P/E of 7.7. There is also the potential for income as ITV has promised to restore its dividend this year. Analysts have pencilled in a potential yield of 3.1%.
Of course, there are a couple of reasons to be sceptical about the group’s growth outlook. It is having to fight off competition from sizeable American streaming groups, which have deeper pockets. These could hit ITV’s advertising revenue, although it is also generating income from these companies at its production arm.
Favourable environment
Inflation is rising around the world and trying to determine how rising prices will affect individual companies is challenging. However, research shows that consumers seek cheaper products during periods of rising prices.
This suggests the outlook for B&M European Value Retail (LSE: BME) is improving. The FTSE 100 enterprise is looking to capitalise on rising consumer demand for its services by increasing the store count. This strategy has produced results in the past, and I see no reason why the company cannot follow the same playbook as we advance.
That said, B&M’s growth is far from guaranteed. The retail sector is incredibly competitive. The company could become entangled in a price war with one of its peers. This could have a significant impact on its expansion plans.
Despite this risk, I am confident consumers will continue to flock to B&M’s offer, suggesting it is one of the best stocks in the FTSE 100 to own in order to ride the inflationary trend.
Rupert Hargreaves owns ITV. The Motley Fool UK has recommended B&M European Value and ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
