The Motley Fool

Why did the JD Sports share price lead the FTSE 100 on Monday?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Screen of price moves in the FTSE 100
Image source: Getty Images.

I check the biggest risers and fallers in the FTSE 100 most mornings. And on Monday I wasn’t expecting what I saw. By early morning, JD Sports Fashion (LSE: JD) was leading the way. At its highest point, the JD share price was up more than 8%. And at the time of writing, after the market closed, the gain stood at almost 6%.

That’s more than twice the FTSE 100 company in second place, Spirax-Sarco, so what was happening?

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

It’s all about the collapse of Arcadia, the owner of Topshop, Burton and Dorothy Perkins. And Mike Ashley is getting in on the act. It seems Mr Ashley, the man behind Frasers Group (LSE: FRAS), formerly Sports Direct International, offered to stump up £50m as a loan to keep things running for now. And he also appears keen to get his wallet out for any top-brand administration disposals.

Ex FTSE 100 company

Frasers Group was itself a FTSE 100 member when it was Sports Direct. But its share price is now down close to 50% since mid-2015. And it dropped out of the top index in 2016. So it all looks like a group of companies fighting over the remnants of our increasingly outdated and struggling high street giants.

Anyway, the mooted loan appears to have fallen through quickly. And observers expect Arcadia to call in Deloitte as administrators within days. So what has this got to do with JD Sports?

Seeking acquisitions

JD is still a buoyant FTSE 100 company. And it’s in a more powerful position than most to notch up bargain-priced acquisitions among the strugglers. It’s been pursuing a possible acquisition at Debenhams for some time, and a deal was rumoured to be about to emerge last week. But in recent days, investors appear to have gone off that idea, pushing the JD share price down nearly 15% last week week. Why?

Well, Arcadia is Debenhams’ biggest concession-holder. Debenhams stores are home to numerous outlets for a variety of Arcadia’s brands. The Arcadia collapse that could be as little as hours away throws the outlook for Debenhams into question again. Not that there was really much clarity in the first place.

Top dog struggle

So that seems to be what’s behind the JD Sports share price hike on Monday. It’s a collective sigh of relief from investors after exclusive talks between JD and Debenhams ended with no deal. But what happens now in the struggle for superiority between these FTSE 100 and FTSE 250 competitors? The way could be open for Frasers to make a new approach for Debenhams. And there might be opportunities for investors to make some profit from whoever comes out on top.

But do you know what my feeling is right now? Confusion, mainly. One thing I am certain of is that I won’t be buying any of these shares any time soon.

JD Sports looks like a respectable FTSE 100 company with a great track record for investors. But its shares are on a P/E multiple of around 30, with tiny dividends on offer. Frasers Group’s prospective P/E is lower at 22. But there’s no dividend. And it’s driven by the sometimes mercurial Mike Ashley.

I see far less bewildering investing options out there.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.