The FTSE 100 isn’t known for its growth stocks. This index doesn’t have big tech growth stars such as Apple and Amazon.
However, look closely and you’ll find there are a number of companies with strong long-term growth potential delivering excellent returns for investors. Here’s a look at two such Footsie growth companies I’d buy for 2021.
One of my favourite FTSE 100 growth stocks
One of my favourites right now is JD Sports Fashion (LSE: JD). It’s been a great performer over the last five years, returning over 300%. However, I think it can climb higher in 2021.
There are a few reasons I’m bullish on JD. Firstly, it’s profiting from the enormous brand power of Nike and Adidas. These two sports powerhouses are going from strength to strength in today’s digital world. Nike, for example, just had a blowout quarter, smashing analysts’ forecasts.
Secondly, it’s benefitting from a number of dominant fashion trends including the continuing popularity of trainers and athleisure wear. With the global markets for athletic footwear and athleisure forecast to grow at around 7% and 8% respectively between now and 2025, JD looks well-placed for success.
JD’s sales took a hit in 2020 due to the coronavirus pandemic. If the next financial year however, sales are forecast to rise 14%. With the stock trading on a forward-looking P/E ratio of 23, I see plenty of potential for growth in 2021 and beyond.
Data is the new oil
Another FTSE 100 growth stock I like the look of right now is credit score specialist Experian (LSE: EXPN). After collecting information on consumers for over 25 years, it has access to a wealth of data and looks well-positioned for success in today’s data-driven world. Next year, revenues are forecast to grow 9%.
One reason I believe Experian has a lot of potential is that the company is shifting from simply selling its data to selling it enhanced by decision tools. The ‘Decisioning’ side of the business – which helps organisations make the most of the data – looks to have significant growth potential.
Last year, Decisioning revenues were up 8% organically, benefiting from strong performances in fraud and identity management services. Portfolio manager Nick Train, who is one of the best growth fund managers in the UK, believes the shift to decision tools is “what will drive substantial growth over the next decade.”
Aside from its data-based growth potential, I also like the fact Experian is a high-quality business. It operates in a market with few competitors and, as a result, is very profitable. It also boasts an excellent long-term dividend growth track record.
Experian shares currently trade on a forward-looking P/E ratio of about 33. That means the stock isn’t cheap. However, given the company’s dominant position and its growth potential, I believe that valuation is fair. I think this FTSE 100 growth stock has a lot of potential in 2021 and beyond.
Edward Sheldon owns shares in JD Sports Fashion, Experian, Apple, and Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Apple, and Nike. The Motley Fool UK has recommended Experian and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. 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.