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These 2 FTSE 100 stocks are up 750% and 100% over five years, and I’d buy them both

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Retail fashion/sportwear chain JD Sports Fashion (LSE: JD) is up an incredible 750% in the past five years, against growth of around 10% across the FTSE 100 as a whole. You don’t find many blue-chip stocks with this kind of growth profile, making it difficult to resist. 

Good sports

What makes this even more impressive is that JD operates in the embattled high street retail sector, which is floundering as shoppers head online. Its market-cap now stands at an impressive £7.66bn – the last time I looked at the stock, in mid-September, it was just £6.6bn, as the growth continues without pause. How has it succeeded where so many have come unstuck?

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The obvious answer is by bringing in a lot of money – its recent set of interims showed six-month revenues up 47% to £2.72bn. This is down to its diversified product range, which embraces both sportswear and casual fashion, including tie-ups with key brands such as Nike and Adidas, and solid outdoor brands Blacks and Millets.

Run of success

JD doesn’t just operate in the UK, but is expanding across Europe, Asia-Pacific and the US, which gives it geographical diversification and plenty of scope for international growth. Better still, it can beat off the internet threat with a successful website operation of its own.

There’s a catch – the stock now trades at a pricey 23.7 times forward earnings, and those earnings look set to slow. Over the last three years, they have grown by 58%, 55%, and 13%. This year looks flat, City analysts reckon, and although it will quickly return to growth, this will be at a slower pace, 16% in 2020 and 12% in 2021.

Given the high valuation, any disappointments could weigh on the JD share price. This remains a difficult stock to bet against though, and with that proviso I’ll still call it a buy.

This stock’s plugged in too

Everything is relative. Normally, I’d be raving about fellow FTSE 100 stock Ferguson (LSE: FERG), whose share price has soared 101% in five years, but that growth looks positively sluggish when set alongside JD Sports Fashion.

Don’t let that put you off, the multinational plumbing and heating products distributor has a strong track record of share price and dividend growth. The £15.6bn group generates 92% of its trading profits from the US, with the remaining 8% split evenly between the UK and Canada, giving you direct exposure to the US economy, but with a London listing.

The Ferguson share price has continued to climb this year, helped by the Fed’s recent interest rate cuts, which should maintain US growth and support its property market, which drives demand for Ferguson’s products.

The stock currently trades at 15.8 times forward earnings, which isn’t particularly demanding, especially since it has delivered healthy double-digit earnings per share growth over the last three years.

Those earnings also look set to slow, but otherwise the stock looks solid for now, and its forecast yield of 2.6% is nicely covered 2.5 times, which holds out the promise of more progression on that front.

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Harvey Jones 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.

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