When I bought sportswear and trainers specialist JD Sports Fashion (LSE: JD) on 22 January, I thought it looked like the very best share to buy for the year ahead.
This was a brilliant growth stock that had been bombing along for years, but had just sold off after a tough Christmas trading period. The board had issued a profit warning, and this allowed me to grab it at a discounted price.
Then all I had to do was sit back and wait for the cost-of-living crisis to ease. When the outlook brightened and shoppers started splashing cash on trainers again, the JD Sports share price would race out of the blocks. That was my reasoning. It was wrong.
Instead of being one of the best-performing shares on the FTSE 100 over the last 12 months, it’s turned out to be the very worst of all.
I called JD Sports shares completely wrong
JD shares have lost almost half their value in that time, plunging by 43.75%. That’s worse than B&M European Value (down 34.39%) and Mike Ashley’s Frasers Group (down 36.77%). The fact that all three are in the retail sector tells us something.
Having bought after the original profit warning and share price dip, I haven’t done as badly as some. Personally, my stake in JD Sports is down 16.1%. It’s still not ideal.
I’m saying all this as a warning. I think the 2025 outlook for JD Sports is much, much brighter, but I’ve been wrong before.
The group has been hit by forces largely beyond its control. ‘Higher for longer’ interest rates, the consumer slowdown, problems at key partner Nike, Budget hikes to employer’s National Insurance, and now President-elect Donald Trump’s trade tariff threats.
Its shares had been fighting back. But they slumped 15% on 21 November after the board was forced to issue another profit warning. It blamed a volatile October, amid widespread discounting, milder weather and consumer caution ahead of the US election.
I’m sticking by my upbeat forecast
With markets falling across the board after the US Federal Reserve warned it would slow interest rate cuts next year, there’s no respite.
Yet with a price-to-earnings ratio of exactly 8, I think JD Sports shares look nicely valued. And I’m clearly not the only one.
The 15 analysts offering one-year share price forecasts have produced a median target of 157.34p. If correct, that’s an increase of a thumping 63.01% from today. Forecasts aren’t guaranteed of course, but that fills me with Christmas cheer. JD Sports may not be very best FTSE 100 share for anyone to consider buying for 2025. But I think it’s not far off.
I believe 2025 will be bumpy. In fact, I’ve been pleased by the recent sell-off, as it skims off some of the froth that built up after the ‘Trump bump’. Investors will no doubt spend too much time looking at interest rate forecasts. But give today’s gloom, even a modest three rate cuts next year might be well received.
Even if I’m wrong, at today’s price, the JD sports share price looks like a screaming buy for me. The only problem is that I’d buy more but I already have an outsized stake in its fortunes.
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Harvey Jones has positions in JD Sports Fashion. The Motley Fool UK has recommended B&M European Value. 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.
