The UK growth share I’d consider buying even at an all-time high

This UK growth share has hit a new all-time high. But Christopher Ruane would still consider buying it at its elevated price. Here’s why.

| More on:

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.

Sports retailer JD Sports (LSE: JD) impressed the City with its interim results yesterday, with the UK growth share touching a new all-time high. Even at the elevated JD Sports share price, I’d consider adding it to my portfolio. Here’s why.

The growth story at JD Sports

As I’ve outlined before, there’s a strong growth story at the company. It understands retail excellently, has a powerful online — as well as bricks and mortar store – – presence and has been aggressively expanding internationally.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

That combination of factors continues to work well for the company, as its results showed. Revenue, gross profit margin, profits, earnings per share and cash on hand all rose compared to the equivalent period last year. That period included the onset of the pandemic, so a direct comparison is difficult. But nonetheless, the results are storming.

Take the revenue figure as an example. At £3.8bn, not only is it 52% above last year’s interim level. It’s also a massive 43% higher than the pre-pandemic 2019 numbers for the same six month period. JD is a growth machine and the results suggest that it may have come out of the pandemic even stronger than it went in.

Why I like this UK growth share

What could that mean for me as an investor? On one hand, I think the shares look expensive on the surface. They sit at an all-time high, with a price-to-earnings ratio in the 30s. On the other hand, if JD can continue to grow as it has been doing, I think the valuation will look increasingly comfortable. With an eye on the prospect of sustained strong future performance, I don’t think the current JD Sports share price looks costly.

I think the company has a winning formula and proven ability to execute it. It has proven itself able to incorporate some potential risks, such as the rise of online retail, into its own growth strategy.

JD Sports share price risk

That doesn’t mean that there aren’t risks, though. Take its international expansion as an example. Opening up in overseas markets brings expenses and adds complexities, especially at a time when global supply chains are already stretched. Local competition could mean lower profit margins than in JD’s existing markets. That could mean revenues grow but profit margins shrink.

A UK growth share I’d consider

I’ll be keeping an eye on the JD Sports share price performance in the coming weeks and months.

One of the interesting things about growth shares is that often, they keep giving. Even though I didn’t buy in the early years, there’s still money to be made. JD has increased 275% in the past five years alone. A year ago, investors may have wondered whether future growth would be limited. If they decided then not to buy, they would have ended up missing out on the 33% growth over the past year.

Despite the risks, I would consider JD Sports as a UK growth share to buy and hold in my portfolio for years to come. 

One FTSE “Snowball Stock” With Runaway Revenues

Looking for new share ideas?

Grab this FREE report now.

Inside, you discover one FTSE company with a runaway snowball of profits.

From 2015-2019…

  • Revenues increased 38.6%.
  • Its net income went up 19.7 times!
  • Since 2012, revenues from regular users have almost DOUBLED

The opportunity here really is astounding.

In fact, one of its own board members recently snapped up 25,000 shares using their own money...

So why sit on the side lines a minute longer?

You could have the full details on this company right now.

Grab your free report – while it’s online.

Christopher Ruane 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.

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

With no cash to invest, here’s how a falling stock market could still help me to get rich

Stephen Wright explains why falling share prices might be good news even for an investor with no cash on the…

Read more »

Business people shaking hands
Investing Articles

Director dealings: Lloyds, IAG, SSE

Director dealings can indicate whether a company's doing well. So, here are this week's director dealings from three of the…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Why Kingfisher’s DIY empire could mean it’s a recession-proof stock

Kingfisher’s stock has been pummelled in recent months, but historically DIY stores have done well during recessions.

Read more »

Burst your bubble thumbtack and balloon background
Investing Articles

4 recession stocks that I’d buy to protect myself

Jon Smith talks through some of the recession stocks he has on his watchlist, ready to go if the economy…

Read more »

Happy diverse people together in the park
Investing Articles

My Stocks and Shares ISA is in the red… and I’m still smiling

Having not invested through a downturn before, this is the first time I've seen my Stocks and Shares ISA showing…

Read more »

University graduate student diploma piggy bank
Investing Articles

Should I be concerned about the windfall tax for my BP shares?

What does the new UK windfall tax mean for the BP share price? Michelle Freeman digs into the details to…

Read more »

Buffett at the BRK AGM
Investing Articles

What Warren Buffett’s wisdom and investing in stocks will teach you about life

Investing is a journey of self-discovery. So what will stocks and the words of legendary investor Warren Buffett teach you…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

5 ‘no-brainer’ income stocks to buy today!

Amid soaring inflation, I'm looking at these income stocks, offering big yields, to grow my portfolio.

Read more »