What a little beauty JD Sports Fashion (LSE: JD) has proved to be over the past decade. In that time its stock price has ballooned at a compound annual growth rate of 38%, from around 28p in the autumn of 2009 to above 700p today.
This means that investors who bought £1,000 worth of shares back then would now be sitting on a whopping £42,143.
But an exploding share price isn’t all that JD investors have to celebrate. Those investors who bought a grand’s worth of stock 10 years ago would also have received total dividends of £4,978 during the period.
And I’m backing the FTSE 250 firm to make memorable returns for its investors in the decade to 2030, too.
JD Sports has been a mainstay on the UK high street for almost four decades and more recently has homed in on the casual sportswear (or ‘athleisure’) segment. Its purpose was to light a fire under profits growth and differentiate itself from Sports Direct and other general sportswear retailers. This has been achieved in part by entering into agreements with some of the world’s biggest sportswear manufacturers to exclusively sell some of their hottest lines.
There’s been a steady stream of data in recent months showing how the broader UK retail sector is struggling under the weight of Brexit. The most recent figures from the CBI have showed retail sales in the UK falling at their fastest pace since 2008. But JD is having none of it – fresh financials unpacked this week showed like-for-like sales across the company’s British and Irish stores boomed 10% in the 26 weeks to August 3.
Looking ahead, it is JD’s rise in foreign marketplaces – delivered by rampant international expansion – that will make it one to watch over the next 10 years. The retailer added a net 31 stores across mainland Europe, Asia and the US in the last six months alone and there is no reason why it can’t keep driving into overseas markets. Like-for-like sales also grew by double-digits in Asia and Europe in the first fiscal half.
Much more to come
There’s a wealth of evidence out there to suggest that JD’s blend of international expansion and focus on the athleisure end of the market should keep delivering. Just this week, research house Global Data predicted that sales of casual sportswear will rise 9% in 2019 and will continue to outperform the broader clothing and footwear market through to 2023 at least.
It’s not a surprise that City analysts are expecting JD’s earnings to keep growing by double-digit percentages through the next two fiscal years at least (to be precise, they anticipate rises of 15% and 11% respectively). Such projections leave the firm dealing on a forward price-to-earnings ratio of around 21 times, and I consider this to be great value.
Sure, this is a little toppy on paper. But it’s a reading that looks pretty cheap to me, considering JD’s great profits record of the past decade, not to mention its rising global might, which bodes extremely well for the next 10 years. All in all, I consider JD to be one of the hottest growth shares on the FTSE 250 today.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.