Going up nearly 4% in the last month, the FTSE 100 index looks healthy right now. Promising half-yearly reports from several top companies boosted returns this week. As a result, some overlooked shares that saw strong growth during the last bull run are showing signs of a return.
Here are two FTSE 100 shares that no one is talking about that I think could offer explosive growth going forward.
Top FTSE 100 growth shares for my portfolio
Irish betting firm Flutter Entertainment (LSE:FLTR) and discount retailer B&M (LSE:BME) are the shares I am looking at right now. Both operate in sectors that are gaining a lot of traction and are coming off historic bear runs.
The recent online gambling surge is a rarely talked about side effect of the pandemic. The lack of live sports and the cryptocurrency surge created the perfect storm for online betting growth.
I think Flutter Entertainment stands to gain a lot from this growth. This FTSE 100 share owns and operates some of the largest names in the space like Betfair, Paddy Power, and Sky Bet. The company also operates six hundred betting shops in the UK and Ireland.
In 2021, the company generated total revenue of £6bn, 17% higher than in 2020. The company also saw a 23% growth in monthly players across all its platforms, registering 7.6m unique users.
Flutter shares are down 46% since March 2021. It is trading at 8,700p, close to its pre-pandemic high of 9,300p. This means that I could acquire shares in this thriving business at close to 2019 levels!
The next company on my watchlist, B&M Value Retail is a discount supermarket chain operating in Europe. The company recently opened its 700th store in England, making it one of the largest chains in the region. In fact, the company’s revenue has increased every year since 2009, with a big jump coming in 2021 with £4.8bn in sales.
With UK’s inflation projected to increase well into 2023, I think discount retail will become more popular. And this FTSE 100 firm is already eating into the market share of giants like Tesco and Sainsburys.
After the 2022 market crash, B&M shares are down a whopping 34%. But in the last month alone, they are up 8.4%. I think this momentum could continue given the relatively low price-to-earnings ratio of 9.4 times and the steady 3.4% yield.
Concerns and verdict
But it is always mandatory to look at the negatives before making an investment. Gambling companies are always subject to tighter regulations that could drop profits quickly. And I think there will be a pullback as policymakers are recognising rampant gambling addiction among youngsters.
Similarly, undercutting large grocery chains will prove tougher for B&M if this inflation persists. B&M’s major sourcing market is China, which is also witnessing an economic slowdown. This could increase costs and drop revenue.
Also, I think now is the best time to invest in FTSE 100 shares. In 2022, businesses look more streamlined and better prepared to navigate choppy waters. In the US, hiring rates have remained high, which is a sign that businesses are not reading too much into recession concerns
Both FTSE 100 shares look like they are back on their way up. And I think I will make an investment in these shares if the recovery continues in August.
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- 3 growth shares I think could do well, even in a recession
- 3 bargain FTSE 100 shares I’d buy before a market recovery
Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value, Sainsbury (J), and Tesco. 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.