Down 23% in 2024! I think I’ve just bagged myself a FTSE 100 bargain

Taking advantage of a significant pullback in its share price this year, our writer’s recently taken a position in this FTSE 100 member.

| 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.

many happy international football fans watching tv

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

A recent trip to the Cheshire Oaks outlet shopping centre resulted in me unexpectedly taking a position in JD Sports Fashion (LSE:JD.), the FTSE 100 sports/fashion retailer. Buying shares was the last thing on my mind but I was persuaded by what I saw.

Of the 140 stores on-site, three had queues to get inside.

The popularity of Crocs and Birkenstock didn’t surprise me. But the large number of shoppers waiting outside both of them was partly due to the small size of their stores. However, it was the fact that people were prepared to wait to enter Nike (NYSE:NKE) — possibly the largest shop on site — that got me thinking.

Should you invest £1,000 in Alpha Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Alpha Group made the list?

See the 6 stocks

God of victory

The apparent popularity of the American sportswear brand appears to buck a wider trend. In recent years, Nike’s decided to concentrate on selling through its own stores directly to the consumer (DTC) rather than via third parties, like JD Sports.

However, on 27 June, the company revealed that during the three months ended 31 May 2024, its DTC sales fell 8%. On the same day it also announced a cut in its 2025 sales forecast.

The news caused a 20% fall in its stock price. It’s now only 16% higher than when the pandemic was wreaking havoc.

Despite the queues in Cheshire, some industry experts claim that Nike has lost its way.

It appears to rely too much on its legacy brands. For example, Michael Jordan last played an NBA basketball game in 2003. Does anybody under the age of 35 really know who he is?

A better idea?

The JD Sports share price has undoubtedly been affected by Nike’s problems. It fell 5% when the American company provided its gloomy update in May. It’s now 30% lower than its 52-week high.

Created with Highcharts 11.4.3JD Sports Fashion + Nike PriceZoom1M3M6MYTD1Y5Y10YALL15 Aug 20197 Apr 2025Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '250www.fool.co.uk

This isn’t surprising given that estimates suggest Nike accounts for 50%-55% of JD Sports’ revenue. But the retailer is more than just one brand.

Nike’s strategy has opened the door for some lesser-known rivals to gain market share. Castore, On Running and Hoka are the new kids on the block. JD Sports sells all three, as well as Crocs and Birkenstock which are also in vogue at the moment.

And despite its problems, my visit to Cheshire confirms that Nike’s products remain popular. By stocking these, along with established favourites like Adidas, Puma and New Balance, I think JD Sports is well positioned to cover all budgets and demographics.

In addition, I’m sure the Olympics will have boosted sales in the short term.

Some concerns

But there are risks. The company operates 3,400 stores in 38 countries which is a logistical nightmare. And these account for 75.7% of sales, so JD remains vulnerable to pure play online retailers who don’t have to pay property taxes.

In addition, its dividend is miserly which means many income investors will look elsewhere.

However, with a forward price-to-earnings ratio of 9.4 — below the FTSE 100 average — I believe now’s a good time for me to buy.  

I therefore hope to capitalise on JD Sports’ strong track record in growing its earnings, both organically and through acquisition.

Source: company website / PBT = profit before tax

The company’s due to release its first-half results later this month (August). These should give me an early indication as to whether I’ve made the right decision.

Should you buy Alpha Group now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James Beard has positions in JD Sports Fashion. The Motley Fool UK has recommended Nike. 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 best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

2 FTSE 100 and FTSE 250 stocks to consider as stock markets plummet!

Looking for lifeboats as growth-crushing trade tariffs loom? Here are two (including a FTSE 100 gold stock) I think merit…

Read more »

Number three written on white chat bubble on blue background
Investing Articles

Just released: the 3 best growth-focused stocks to consider buying in April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

£10,000 invested in Watches of Switzerland shares 1 year ago is now worth…

Watches of Switzerland shares have been decimated by Trump’s tariffs on Switzerland. Dr James Fox explores whether this is an…

Read more »

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

Growth stocks are crashing! Here’s what I’m doing now

Our writer shares his thoughts as growth stocks get crushed, as well as a favourite from the Nasdaq that he…

Read more »

Investing Articles

What’s going on with the Nvidia share price now?

The Nvidia share price is tanking. Once the most valuable listed company, Nvidia has seen more than $1trn wiped off…

Read more »

Investing Articles

This FTSE AIM stock has £2.3bn in net cash, and a market cap of £2.4bn!

I love this FTSE AIM stock, but it really hasn’t delivered for me yet. The stock trades with crazily low…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

Down 15% in a week! Are these 5 FTSE 100 fallers screaming buys as markets plunge?

Five of Harvey Jones's favourite FTSE 100 stocks all have the same thing in common – they've fallen around 15%…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

2 stocks that have been crushed and now offer a ton of value

Edward Sheldon has been scanning the market for stocks that offer value after the sell-off. Here are two shares he…

Read more »