The price of this FTSE 100 share has almost halved. I would buy!

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Over the past few months, I have purchased a FTSE100 sharing which I think could have a bright future. The market suggested otherwise, with the price of the stock I picked falling 47% in the past 12 months. Here’s why I view this fall as a buying opportunity for my portfolio.

Long-term growth record

The company in question is a retailer JD Sports (LSE: JD). A trip to your local high street can make flogging a sports kit seem like a simple undertaking. But doing it correctly requires a number of skills. JD has proven to have them in abundance, like staying ahead of the latest trends and cutting through the digital marketing clutter to reach younger customers.

This helps explain why JD has grown so much over the years. Over the past decade, for example, annual revenues have grown from less than £1bn to £8.6bn. Pre-tax profit fell from £79m in 2011 to £655m last year. In other words, in just a decade, the business has grown eight or nine times.

What happens afterwards?

But, as any athlete knows all too well, past performance is not necessarily an indicator of what will happen later on the track. It seems unlikely to me that JD can generate another decade of revenue growth at similar levels because its baseline is now simply too large. Indeed, the growth helps explain why JD Sports is now a member of the FTSE 100.

Increasing current revenues again by a factor of eight or nine would mean the company’s sales were bigger than that. of Nike, for example, which is possible but would be extremely difficult to achieve without running into regulatory concerns about market dominance. This is already happening as competition concerns forced JD Sports to sell Footasylum this year for less than it paid to acquire it.

But what JD’s excellent track record indicates in my opinion is that they are a retailer at the top of their game. He clearly understands the inner workings of not only product sourcing and marketing, but also managing a global supply chain. This helped it expand internationally and it is now a major force in sportswear retail in the United States.

The company published its interim results today and its turnover increased by 14% compared to the same period last year. The company expects overall profit before tax and exceptionals for the year in line with the previous 12 months, which is its best performance to date.

A FTSE 100 stock I would buy today

There are risks to the business despite its proven capabilities. Inflation could eat away at profit margins and a tightening economy could cause shoppers to replace their sneakers and hoodies less regularly, hurting sales. On top of that, the company’s new management (a new CEO joining later this month) has yet to prove it can steer the ship as successfully as the former executive chairman did. .

Despite this, the fall in the share price seems exaggerated to me. JD now has a market capitalization of just under £6bn, less than 10 times last year’s pre-tax profit. I see this as an attractive price for what I believe to be a quality company.

I would gladly buy more JD Sports stock for my portfolio today.

Karen J. Nelson