As Warren Buffett says, when others are fearful it is the time for an investor to be greedy. Fear has been stalking the markets in the past few days and many leading FTSE 100 shares have been on the sharp end of a wave of selling.
One well-known FTSE 100 share has seen its price collapse 39% over the past year alone.
It is a share I have held for a while already. But last week I took the opportunity of a tumbling price to buy some more – and this week, as the price headed even lower, I did the same again.
Keeping a rational head in turbulent markets
That sort of behaviour can be wealth-building, but it can also be risky. While stock market turbulence pushing down a share price can lead to a bargain-hunting opportunity, it might also be reflecting some simple economic realities. Maybe the driver for a stock market correction has also reduced the long-term value of a business, something that is then reflected in its share price.
During market turbulence, there might not be time to do detailed research. So I think a smart investor is always prepared in advance, ready to pounce when they see a buying opportunity that may be short-lived.
Defying the wider market
The specific share in question, by the way, is JD Sports (LSE: JD). As the wider FTSE 100 tumbled last Wednesday (9 April), it defied the gloom and moved up sharply following a trading update.
That came after some sharp falls in the weeks before – and that was when I made my purchases.
At face value, the trading update might not seem great. The sportswear retailer said it was too early to provide clear guidance on what US tariffs may mean for its business. It reported that last year’s performance came in line with expectations and that the current year’s outlook is for a decline in like-for-like revenues.
Why was the market excited, then? Following multiple profit warnings and downgraded expectations, JD simply delivering in line with revised expectations for last year. And that was a relief.
Looking ahead, while like-for-like sales may decline, the FTSE 100 firm still expects significant revenue growth (around 14%), thanks to prior acquisitions and an expanded store footprint.
Meanwhile, JD plans to reduce its future store estate expansion activity. That should mean lower capital expenditures, so hopefully a higher proportion of operating profits will feed into the post-tax profit.
Quality company at a knockdown price
Despite that, JD Sports has a market capitalisation of less than £4bn. The retailer ended its most recent financial year with net cash, before lease liabilities. It expects 2026 profit before tax and adjusting items to be in line with consensus estimates, of £920m.
That price-to-earnings ratio looks very low to me for a solidly profitable FTSE 100 company with strong growth prospects.
Yes, tariffs are a risk given JD’s large US footprint. A weak economy could hurt consumer confidence, damaging sales and profits. But as a long-term investor I am looking beyond the short-term economic outlook.
I reckon JD Sports is a FTSE 100 bargain hiding in plain sight and have been building up my shareholding because of that.
