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2 FTSE 100 stocks I’d buy right now

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FTSE 100 (London Stock Exchange Share Index) on Gold Coin Stacks Isolated on White
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The FTSE 100 index has been rebounding nicely since its sharp drop in 2020. Closing in on pre-pandemic highs of 7,674, the index currently stands at 7,101 and has been growing at a steady 5.48% in the last six months. I think this is an excellent time to look at some growth stocks that will give my portfolio some much-needed stability after a turbulent 12 months.

Let’s play

The first stock on my list is JD Sports Fashion (LSE: JD). After being inducted into the FTSE 100 in 2019, the group managed to raise revenue from £6.11bn to £6.16bn in 2020-21. This is very impressive considering the events of the past year.

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The company’s earnings per ordinary share took a slight hit, going from 34.26p to 32.19p in 2021. But a big encouraging factor for me is that in 2021, JD Sports increased cash reserves by about a mammoth 85%, or 365.5m, going from £429.9m to £795.4m. The group also earned £1.06bn from global retail operations.

Another optimistic sign for me is how the company is using this cash to grow its global business, especially the US market. In April, it signed a $495m deal to acquire DLTR Villa, which operates 247 stores across the US. It also snapped up California-based Shoe Palace and its 167 stores for $325m.

JD Sport’s US market accounts for 29% of its revenue and this push helped JD Sport open its first flagship store in New York’s Times Square. The focus on markets outside the UK is encouraging as the profit margins abroad are higher, resulting in more net revenue. Subsequently, the board is predicting a 5%–10% increase in pre-tax profit for 2021–22, which is a great sign for investors.

The company still faces stiff competition from brands like Nike and Adidas and also online retailers like Amazon. Also, there is a risk that another lockdown-like scenario could affect the already modest 1.44p dividend yield for 2021. Despite this, I am confident that JD Sports will continue to grow in 2021 and beyond, cementing itself as a go-to FTSE 100 investment for long-term returns.

Investing in healthcare

With UK’s medical force slowly shifting focus from the pandemic, there is a push to diminish the backlog of patients waiting for elective procedures. FTSE 100 staple and manufacturer of orthopaedic surgical equipment, Smith & Nephew (LSE: SN) could be set for a steady increase in sales over the next year.

After a turbulent start to 2021 which saw share prices fall 3.49% in six months, the company could benefit from the 140,000 patients in the UK (nearly 10m worldwide) on the waitlist for elective procedures. The company also reported an 11.5% jump in revenue to £815.2m in the first quarter (Q1) of 2021, which could be a sign of things to come. This could lead to consistent gains in the market as its sales improve worldwide.

But concerns over the delta Covid-19 variant and another spike in cases could affect Smith & Nephew stock adversely. Its focus on global markets means that revenue depends on several extraneous factors. Along with sales, its operating profits have dropped significantly in 2020. I think the recovery will take time as global medical efforts continue to focus on Covid-19. But I remain optimistic of its long-term potential, taking into consideration that the number of global orthopaedic services is bound to increase dramatically. 

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Smith & Nephew. 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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