An unloved FTSE 100 stock I think could soar in 2022!

The rush to value retail is heating up as the cost of living crisis intensifies. It’s a theme I think could supercharge sales at FTSE 100 retailer B&M European Value Retail (LSE: BME).

A report from Kantar Worldpanel this week illustrates the growing stress on shoppers’ budgets. It predicted that the average UK household could see its annual food bill leap £271 in 2022. And it noted discount chains Aldi and Lidl are enjoying a surge in trading right now.

Sales at Aldi leapt 4.2% in the 12 weeks to 17 April, Kantar said, making it the fastest-growing retailer in the period. Its German low-cost rival Lidl came in a close second with sales growth of 4%.

Budget chains are booming

Kantar head of retail and consumer insight Fraser McKevitt commented that “we’re seeing a clear flight to value as shoppers watch their pennies.” It’s a trend I’m expecting to accelerate as inflation picks up in the coming months, putting even more pressure on consumer budgets.

Consumer price inflation (CPI) hit new 30-year peaks of 7% in March. And the smart money is on inflation surging even higher as the Ukraine war continues and Covid-19 cases reignite in China. These two issues threaten to keep commodity prices inflated and disrupt stretched supply chains even more.

The Bank of England (BoE) said in March it expects its peak CPI forecast for 2022 to be beaten by “several percentage points.” Unfortunately for consumers, I think the BoE could continue its track record of upward revisions too, as we move through 2022.

A FTSE 100 bargain

I think things are looking good for B&M in the short-to-medium term then. Yet a glance at the FTSE 100 firm’s share price would suggest the landscape is, in fact, pretty grim.

B&M’s share price has slumped in value over the past year. And on Monday, it closed at its cheapest since January 2021, at around 512p.

I think this represents a tremendous dip-buying opportunity for me. And particularly as recent share price falls leave B&M trading on an undemanding forward price-to-earnings (P/E) ratio of around 13 times.

This isn’t exactly cheap on paper. But, in my opinion, it’s a decent valuation, given that B&M is entering the ‘sweet spot’ where sales could soar.

Shares set to rebound?

Look, there are some threats to B&M’s profits. The upcoming departure of veteran chief executive Simon Arora casts huge uncertainty over the direction of the business. As well, retailers like this also face growing cost bases as energy, labour, freight and product-related expenses all rise.

Still, it’s my opinion that B&M can still expect revenues (and consequently profits) to grow strongly as the rush to value retail intensifies. In fact, I think buying the FTSE 100 stock could be a good idea for me before full-year results are released on 31 May. I think that forthcoming release might help the share price to spring higher again.