I had a discussion recently with one of my fellow Fools about JD Sports (LSE:JD). I think it is an excellent pick and a great growth story. Is it one of the best stocks on the FTSE 100 index and should I buy shares for my portfolio?
FTSE 100 growth story
When a sporting goods store opened in a small northern UK town called Bury, just outside of Manchester, in 1981, no one could have guessed what would happen over the next 40 years. Right now, JD Sports is one of the premier companies in the UK with a huge store presence across the world as well as other enterprises under its wing. These include sport, outdoor, and gym brands too.
In 2019, JD was promoted to the UK’s premier index, the FTSE 100. As I write, shares are trading for 1,154p, which is its highest level by some margin. At this time last year, shares were trading for 852p, which is a 42% return. Five years ago, shares were trading for 361p, which is a 261% return. In a 10-year period, the shares have returned over 700%! You get the picture.
Why I like JD Sports
I like JD Sports as one of the best FTSE 100 stocks to buy now for two main reasons.
Consistent performance to keep growing and providing returns to investors is the first reason. JD Sports has an excellent track record of performance which has underpinned its share price growth as well as its continued general upward trajectory too. I understand the past is not a guarantee of the future, however I use it as a gauge. I can see that revenue and gross profit have increased year on year for the past four years, for example. I expect this upward trend and impressive record of performance to continue, especially as it continues to grow.
JD’s growth story is nothing short of remarkable if you ask me. To convert a sole store into a multi-billion market cap firm with a worldwide presence must be applauded. JD’s propensity and hunger to continue this growth and success is another aspect I like about it. As I have mentioned it has branched out into other markets such as the gym market. It is also regularly looking to complete acquisitions as well as open new locations in untapped markets worldwide.
Risks and verdict
Despite my obvious affection for JD Sports as a company and potential investment, there are credible risks. Firstly, shares are trading at all-time highs. This tells me it could be susceptible to a drop if there were any bad news or a drop in earnings. An example of bad news is recent press coverage and a Competition and Markets Authority (CMA) review of one of its acquisitions. It prompted JD to respond to media reports too. Secondly, the recent haulage and supply chain crisis in the UK could affect store operations which is its bread and butter.
Overall, I would add JD Sports shares to my portfolio. I believe it is one of the best stocks to buy on the FTSE 100 with some excellent characteristics and a good track record. I would expect its upward trajectory and growth to continue which could offer me a nice return as an investor.
Jabran Khan has no position in any of the shares mentioned. 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.
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