Everyone loves a bargain and this Fool is no different. Today, I’m looking at one FTSE 100 value stock that I’m strongly considering adding to my own portfolio as soon as I can.
FTSE 100 loser
Shares in retailer JD Sports Fashion (LSE: JD) have been in grim form in 2024, falling 18% in value. Contrast this with the 7% gain achieved by the index and it’s the sort of performance to turn off any would-be stock picker.
But even this pales in comparison to the 45%-or-so loss those who bought a stake in this company almost three years ago would be sitting on, assuming they haven’t already thrown in the (sweat-drenched) towel!
These falls aren’t illogical. Consumer cyclical stocks like JD have really lost their appeal in recent times as high inflation has pushed the vast majority of us to be more careful with our cash. New trainers can wait when just paying the bills becomes more challenging.
But I think that better times might lie ahead.
Green shoots
Earlier this month, the company said it was on target to meet its guidance on annual profit having beaten market estimates for the first half. Adjusted profit hit £405.6m for the 26 weeks to 3 August. Revenue topped £5bn.
What impresses me is the fact that these numbers were achieved despite Nike — one of its key brands and accounting for almost half of all sales — continuing to go through a sticky patch in trading.
If JD Sports Fashion can manage to do this with such a headwind, what might happen when a) Nike gets it mojo back and b) consumer confidence improves?
With regard to the former, the recent appointment of highly-experienced Elliott Hill as Nike president and CEO strikes me as a positive. He’d been with the company since the 1980s before leaving in 2020!
Overseas growth
Obviously, it pays to expect the unexpected. Moreover, this is and will always be a hyper-competitive space. Sales can also be impacted by fads and even poor weather.
Oh, and it’s worth pointing out that this company isn’t exactly a dividend hunter’s dream with a near-negligible yield. Contrast this with some value stocks that regularly throw mountains of cash back to their shareholders. The latter might be very comforting if the UK market staggers a bit as we all react and adapt to any changes announced in the forthcoming Budget.
Then again, there are lots of things I like.
For example, I feel comforted by JD’s multi-brand approach — it also sells Adidas, On and HOKA, among others. This has clearly helped to mitigate some of the damage so far inflicted by Nike’s wobble and, in the event of a slower-than-expected recovery, should continue to do so.
I also like that the firm is growing its international presence at a fair clip, supported by acquisitions like US-based Hibbett. Moves like this clearly raise its profile in other markets. They also make JD increasingly less reliant on the British economy (and consumer).
Bargain stock
Taking all this into account, JD shares look very attractive to me right now, currently trading as they do at a price-to-earnings (P/E) ratio of 10 for FY25.
As things stand, I’d really like to buy today. Now I just need to raise the funds to do so.
