1 cheap FTSE 100 stock I’ve snapped up for 2025 and beyond

Our writer outlines three compelling reasons why he recently decided to add this bargain-basement FTSE 100 stock to his portfolio.

| 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.

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.

The latest FTSE 100 share I’ve bought for my portfolio is JD Sports Fashion (LSE: JD.). It’s slumped 37% year to date and is now 55% lower than it was in November 2021.

Here are three reasons I snapped up some shares.

Created with Highcharts 11.4.3JD Sports Fashion PriceZoom1M3M6MYTD1Y5Y10YALL9 Dec 20199 Dec 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

Still growing worldwide

JD Sports has struggled due to weak consumer demand across the retail sector. In Q3, the company’s organic sales growth was 5.4%, but like-for-like sales were basically flat.

Should you invest £1,000 in JD Sports 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 JD Sports made the list?

See the 6 stocks

Consequently, management now expects full-year pre-tax profits to be at the lower end of its previous guidance (£955m-£1.03bn). That’s not great, but equally not disastrous, in my opinion.

That said, we don’t know when the recovery will kick in. A return of inflation is a risk, while the current holiday season is key for the group. If Christmas trading is poor, the stock could suffer another setback.

Taking a longer term view, however, I think there’s a lot to like. The firm has leveraged its strong brand to form close relationships with both adidas and Nike. Collaborations with these major brands for exclusive releases strengthens JD’s market position and loyalty among consumers seeking the latest trends.

Meanwhile, it opened 79 new JD stores in Q3, taking the total number of openings so far in FY25 to 181. So the company’s expansion continues, while many smaller competitors are unlikely to survive this tough period.

After the recent acquisition of Hibbett in the US, JD’s total worldwide store count now stands at 4,541.

Attractive valuation

The second reason I’ve added the stock to my portfolio is that it looks undervalued to me.

Going on forecasts for FY26 (which starts in February), the forward price-to-earnings (P/E) ratio is just 7.2.

The price-to-sales (P/S) multiple is 0.5, which means investors are currently paying 50p for every £1 of JD’s sales. It’s the lowest the P/S ratio has been in over a decade!

Created at TradingView

At this sort of rock-bottom valuation, I have to imagine most of the bad news is already factored in for the sports fashion retailer. The share price could get a nice rebound if and when things start to pick up.

Most City brokers seem to agree. For example, analysts at Shore Capital recently wrote: “The shares look cheap to us…we see this current weakness as a great entry price with significant mid-term upside if the company can deliver on its ex-UK growth potential.”

Much higher average price target

Finally, the average share price target from brokers is encouraging here. It stands at 157p, which is 50% higher than the current level of 104p.

Indeed, one of the 15 analysts covering the stock has a maximum estimate of 250p — some 137% higher!

Of course, this doesn’t mean it’ll ever reach these prices. But it does highlight how wide the disparity is.

Foolish holding period

Looking past the current weakness, I reckon JD is operating in an attractively large growth market.

According to Hargreaves Lansdown, the global sportswear market is set to grow to $544bn by 2028, up from $396bn in 2023. It should grow even higher beyond 2028 as the shift towards more casual and active lifestyles continues.

As always, I’ve bought the stock with the intention of holding it for a minimum of five years.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

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.

Ben McPoland has positions in JD Sports Fashion. The Motley Fool UK has recommended Hargreaves Lansdown Plc and 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »