With Guy Fawkes night upon us, one place I’m looking for fireworks is not in the sky but the stock market. I’ve identified a couple of shares to buy now for my portfolio that I think have explosive potential.
Explosive sports retail shares to buy now
The first firecracker I would consider buying now for my portfolio is retailer JD Sports (LSE: JD).
The company has a stellar record of value creation for shareholders. The JD Sports share price is 52% higher than a year ago and 256% up from five years ago, at the time of writing earlier today. But what excites me about the company is its slow burn. I think its most spectacular display of business performance could yet be ahead of it.
September’s interim results were outstanding. JD recorded its best first half ever. Pre-tax profit excluding exceptional items came in at £440m. Revenues were £3.9bn. The strong results aren’t just due to pent up demand among customers, I think. They reflect the increasingly attractive model of a retail juggernaut. JD is taking the lessons it has learned in the UK and using them to grow, not only in its home market but also overseas. The US is a particularly promising market for the company in my opinion. I still see a lot of room for it to grow there. Indeed, over half of the £440m came from the US. The company has expanded its US footprint by acquiring the Shoe Palace and DTLR brands, which could spur future growth.
International expansion brings risks too, of course. Markets like the US are already hotly competitive, so expanding there could compress profit margins for the company. But I still rate JD Sports among the best potentially explosive growth shares to buy now for my portfolio.
Scientific sparkler
Guy Fawkes night began with someone messing around with chemicals. Guy Fawkes’ motives were shameful, but his downfall also reflected his poorly chosen lab site. Now, as then, scientific endeavour benefits from the right lab conditions. So another sparkler I would rate highly among shares to buy now for my portfolio is scientific instrument maker Judges Scientific (LSE: JDG).
I’ve written previously about how I think Judges is reminiscent of Warren Buffett’s investment approach. It allocates capital by acquiring instrument makers with wide moats, using a strictly disciplined valuation model.
That financial prowess was in clear evidence in the company’s most recent interim results. Revenue for the first half grew 15% compared to the prior year period. Adjusted basic earnings per share grew 32%. One of the attractions of Judges for me is its demonstrated enthusiasm for high dividend growth. This time the interim dividend per share grew just over 15%.
There are risks with Judges. Some end markets have been slow to recover, which could hurt revenues and profits. Nonetheless, at the interim stage management took the opportunity to upgrade full-year expectations.
The quality of Judges Scientific is factored into its share price, which trades on a price-to-earnings ratio of 52. But I see strong continued growth prospects for Judges Scientific. I would consider buying it for my portfolio.
