I reckon FTSE 100 shares B&M European Value (LSE: BME) and Rolls-Royce (LSE: RR.) could continue their impressive recent ascents.
Here’s why I’d be willing to buy some shares in both stocks when I next can!
B&M
I’m a huge fan of B&M, and reckon its acquisition-led and organic growth in recent years is nothing short of remarkable, in my eyes.
The shares are up 19% over a 12-month period, from 462p at this time last year, to current levels of 553p. Over a five-year period, they’re up 90% from 291p, to current levels.
Despite my bullishness, there are risks to consider. A couple include continued volatility and rising inflation, which could hurt the business’s bottom line. Plus, it has a brick-and-mortar retail operation, which could come under pressure from rising costs and the current malaise in the property market. All these aspects could hurt performance and returns.
Conversely, I reckon B&M will continue its impressive rise. This is the same rise that saw it propelled to the UK’s premier index, after coming from humble beginnings. Recent trading has been positive, despite a tough economic outlook, which shows me resilience. Plus, the rise of discount retailers and supermarket disruptors, as consumers look to get more bang for their buck, could continue. This is because the current economic outlook is still so uncertain.
B&M shares still look well priced on a price-to-earnings ratio of just 14, and there’s a dividend yield of 2.8% for passive income. Although I understand dividends are never guaranteed, I reckon this level of return could grow in line with the business.
Rolls-Royce
The recovery of Rolls-Royce from the doldrums and struggles of the pandemic period, to the current highs, could be made into a film or series one day, if you ask me. The business was borrowing money to keep the lights on back then. Now, it’s very much back on its feet and flying high.
Rolls-Royce shares are up a whopping 167% from 145p at this time last year, to current levels of 388p.
New CEO Tufan Erginbilgiç has steadied the ship, turning losses into profits, and shoring up the firm’s balance sheet. However, other events have helped. An example of this is defence spending rising, which has benefitted the business. Naturally, if conflicts wind down, spending on this front could be scaled back, potentially hurting Rolls-Royce’s ascent.
However, I reckon the business is protected due to its diverse operations. For example, its aviation division is doing well. If global air travel continues to rise and surpass pre-pandemic levels, Rolls-Royce could experience continued boosted performance and shares. Another key aspect could be potential growth in territories such as Africa and China.
Despite Rolls-Royce shares surging in recent months, they still only trade on a P/E ratio of just 13. There’s still time to join the party, if you ask me.
I’m wary that Rolls-Royce’s continued rise is dependent on a few external events. However, based on recent performance and current external events, I reckon the shares will continue heading upwards. We could even see the return of a dividend!
This post was originally published on Motley Fool
