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UK share investing: one of the best FTSE 100 stocks to buy now

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The past 12 months have been an extremely difficult time for many UK retail shares. Sales volumes in the UK fell at their sharpest-ever yearly rate due to Covid-19 lockdowns and the economic downturn. But JD Sports Fashion (LSE: JD) has been able to escape the broader bloodbath. Latest financials showed like-for-like sales up 5% year-on-year in the 22 weeks to 2 January.

There are several reasons why this UK retail share has been able to keep on thriving. It’s the go-to high street retailer in fast-growing field of athleisure. JD Sports also has a significant e-commerce proposition which has enabled the company to offset the mass closure of its stores.

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An ambitious UK growth share

In fact, while the distress signals coming out of the British retail sector have been deafening over the past year, this FTSE 100 stock has been stepping up its ambitious expansion programme instead. It felt confident enough to pay almost half a billion dollars in early February to acquire DLTR. The move expands its presence in the US even further following the $325m takeover of California-based Shoe Palace at the end of 2020.

And the business raised £464.2m via a share placing in recent sessions to continue investing in expansion and to capitalise on future M&A opportunities. Indeed, the JD Sports board said: “There are a number of potentially attractive acquisition opportunities that will become available in due course and which will continue to support [our] successful global expansion strategy.”

A person holding onto a fan of twenty pound notes

Flies in the ointment?

Things might not continue to be plain sailing for JD Sports though. As I explained in a recent piece about Boohoo, signs are emerging that British consumers are beginning to rein in spending as the domestic economy struggles.

The FTSE 100 business faces significant long-term dangers too. The growing importance of sustainability in consumers’ minds might damage UK fashion shares like JD Sports. Sales volumes could also take a significant hit if citizens reduce their wardrobe sizes. Rising demand for recycled clothes could also weigh on profits growth.

An IBM report last summer showed that around six out of 10 consumers it surveyed were “willing to change their shopping habits to reduce environmental impact.”

On top of this, fashion trends come and go with staggering haste, and while sportswear is popular right now, there’s no guarantee it will still be five or 10 years from now. Demand for JD’s products could well collapse through the floor.

A FTSE 100 share on my ISA radar

City analysts reckon JD Sports’ long record of annual profits growth will continue over the medium term, at least. They forecast earnings rises of 19% and 23% in the financial years to January 2022 and 2023 respectively. This leaves the FTSE 100 share trading on a slightly-toppy forward price-to-earnings (P/E) ratio of 23 times.

It’s important to remember that City estimates can fall short of expectations if trading conditions worsen. Still, this is a UK share I’d gladly add to my own Stocks and Shares ISA today.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo group. 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.