One FTSE 100 growth share jumps out at me right now. First, for how far and fast it’s crashed. Second, for how far and fast analysts think it will recover.
So, what’s this extreme stock? JD Sports Fashion (LSE: JD).
For years, JD Sports was one of the UK’s most admired growth stocks, soaring into the blue-chip index as it cashed in on the global boom in trainers and athleisure wear. But over the last couple of years, it’s been absolutely hammered.
JD Sports is the worst-performing stock on the entire blue-chip index over two years, down 61%. It’s the worst over 12 months too, down 48%.
Can JD Sports Fashion bounce back?
And the descent continues. Trading at just under 70p, JD Sports has now slumped to yet another 52-week low.
So what went wrong? Pretty much everything.
Falling sales, a struggling key partner in Nike, an unluckily timed US expansion through a $1.1bn acquisition of Hibbett, weak Christmas trading (two years in a row), and the cost-of-living crisis.
Even the weather gods hate JD Sports. Last year, the board blamed sluggish sales on discounting, mild weather, and consumer caution ahead of the US election.
Today, tariffs are the biggest worry. JD Sports straddles the UK and US, and while some of its brands may escape the worst, European labels like Adidas could be hit hard.
The rain is falling hard on CEO Régis Schultz too. In 2023, he touted plans to make JD Sports a “leading global sports-fashion powerhouse”. Instead, he turned the group into a profit warning powerhouse.
Investors who jumped in hoping for a turnaround have been burned, as the stock has just kept sliding. And yes, I’m one of them. I’ve averaged down on three occasions, and still find myself sitting on a 35% loss.
Is this a top FTSE 100 recovery stock?
For those who love a good recovery story, JD Sports looks tempting.
The 17 analysts covering the stock have a median one-year price target of 120.4p. If correct, that’s a staggering 73% jump from today’s price.
Forecasts are slippery things though. Many of these may be out of date, set before the latest plunge.
There’s a chance JD Sports could deliver that kind of rebound, but it would need Trump to soften his tariff stance and trigger the mother of global stock market rallies. Hope springs eternal, I suppose.
Unsurprisingly, JD’s valuation looks cheap. The trailing price-to-earnings (P/E) ratio is just 5.7, but interestingly, I can’t find a forecast P/E. That’s anybody’s guess today.
JD Sports is undoubtedly beaten down, but could it bounce back? Absolutely.
This stock isn’t for the faint-hearted, though. Any investor considering this falling knife should don armour, because it could keep plunging.
For those willing to take the risk, the potential recovery is eye-watering. So are the potential losses.
