Image source: Getty Images
I’ve gone really big on one FTSE 100 growth stock. I expect great things and markets appear to agree.
So is it about to make me rich? Unfortunately, life isn’t that simple, and nor is investing.
The stock in question is JD Sports Fashion (LSE: JD). I bought shares in the trainer and athleisure retailer in January last year after they slumped on the back of a profit warning following a poor Christmas. My hope was that buying on weakness would set me up for the recovery, but that plan hasn’t quite worked out.
JD Sports is trailing the pack
Christmas 2024 also disappointed and more bad news has followed, leaving the share price down 35% over 12 months.
JD generates more than a third of its revenues in the US after acquiring local retailer Hibbett. The problem is that US consumers are feeling squeezed, while tariffs aren’t helping. With much of JD’s stock sourced from Asia, and European brands like Adidas also in the line of fire, higher prices have hit demand. Add in sluggish Nike sales and wider market volatility and it’s been a bruising spell.
JD has responded by spreading its supply chain across more countries and tightening costs, but reckons the main risk is weaker demand from cash-strapped customers. Reported full-year 2025 profit before tax slipped 2.9% to £923m, although revenues climbed 12% to £11.46bn.
FTSE 100 recovery play
Yet lately there are signs of recovery. The stock is up almost 15% over the past six months, including a 6.5% jump last week. The catalyst was a research note from Deutsche Bank, which raised its price target to from 85p to 100p.
The bank highlighted two potential positives. First, a Nike revival could restore confidence in JD’s sales mix. Second, management credibility is slowly being rebuilt after a run of disappointments. However, it warned that JD’s reliance on US customers means higher prices could still put a strain on demand. Markets chose to focus on the positives.
Low share price valuation
JD looks insanely cheap to me with a price-to-earnings ratio of just 7.53, half the FTSE 100 average of around 15 times. Such a low P/E also suggests investors remain wary, but it still leaves scope for recovery if the business can steady itself.
Broker consensus is really upbeat with a median share price target of 116.5p over the next year. That would mark a rise of almost 25% from today’s 93.26p. Out of 17 analysts, eight rate JD Sports a Strong Buy, one calls it a Buy, and the rest say Hold. Crucially, not a single one is advising to sell.
I’m not rushing for the exit. I know risks remain, from tariffs to the long-term risk that brands like Nike and Adidas favour direct channels over third-party retailers. But with the shares this cheap, I think investors might consider buying. I’m hoping that at some point, JD Sports will shoot out of the blocks. Only time will tell.
