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I’d buy these 2 FTSE 100 stocks for growth in an ISA

Harvey Jones — Sat, 13 Feb 2021 10:17:00 +0000

I love buying FTSE 100 stocks for growth. It’s hugely satisfying looking at a stock pick that has doubled or tripled in value, and thinking: I got that one right.

Here I’m picking out two FTSE 100 stocks with momentum on their side. Although both are now too big to continue rising at the same speed, I still think there’s more growth to come.

JD Sports Fashion (LSE: JD) has delivered a total return of 1,830% measured over 10 years, way more than most FTSE 100 stocks, according to AJ Bell. The vast majority of this, 1,800%, came from share price growth. It would have turned £10,000 into £193,000 in that time.

I’m going for growth

Lately though, the JD Sports share price has stalled. It has fallen 7% over the last 12 turbulent months, although this is better than an average drop of 12% across all FTSE 100 stocks.

I actually think this could be a buying opportunity for me. Last month, JD Sports said full-year pre-tax profit should be “significantly” ahead of market expectations, coming in at more than £400m, rather than the anticipated £295m. Despite lockdowns and shuttered stores, Britons still demand their trainers and athleisure wear.

The JD Sports Fashion share price could rebound if vaccines liberate us from lockdown, and shoppers go on a spree with their accumulated savings. My worry is that its customer base, which is relatively young, will be disproportionately hit by job losses. This FTSE 100 stock is also a little expensive, trading at 23.71 times earnings, although not that expensive. With management raising £464m to hit the acquisition trail, I think the future looks promising.

I am not expecting another 1,830% growth over the next decade, even if we do enjoy another ‘roaring twenties’ as some claim. That would lift the JD Sports market cap from today’s £8.46bn to an unthinkable £163bn! It’s a big boy now, but I think it still has room to expand overseas.

Only one FTSE 100 stock has grown faster over the last decade, and that’s construction equipment rental supplier Ashtead Group (LSE: AHT). It has been helped by the strong US economy, where it generates the majority of its revenues.

Over the last decade, Ashtead has generated a total return of 2,170%, turning £10,000 into £227,000, beating all other FTSE 100 stocks, AJ Bell says. Of that, all but 2,050% came from share price growth, because again, investors get only a measly dividend. I doubt they are complaining.

Two of my favourite FTSE 100 stocks

In contrast to JD Sports, Ashtead has powered on during the pandemic, its share price trading an incredible 45% higher than a year ago. That also makes it a little expensive, at 22.3 times earnings, but again, not that expensive.

I think the Ashtead share price could enjoy another lift, as President Biden pushes through his $1.9trn American Rescue Plan. My concern is that Ashtead has cut its capital expenditure lately, and that could hit future returns. The other is that the pandemic will persist, but as we have seen, Ashtead may weather that better than many FTSE 100 stocks.

I’d buy both inside a Stocks and Shares ISA and take that growth tax-free.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

£2k to invest in an ISA today? I’d check out these 2 FTSE 100 shares

Harvey Jones — Tue, 07 Jul 2020 13:55:19 +0000

If I had £2k to invest right now, I would be looking to invest it into FTSE 100 shares to build my wealth for the long term. After the stock market crash, there are plenty of bargains out there.

Two top names have just updated the markets as the economy edges out of lockdown. Both have a strong consumer focus, and should cash in when people get out and start spending again. An investor with £2k to invest could split it between them, free of tax through a Stocks and Shares ISA.

The JD Sports Fashion (LSE: JD) share price is flat today, as the sports, fashion and outdoor brands specialist reported weaker footfall after the lockdown. It also called for “rental realism” from landlords in the wake of the pandemic.

FTSE 100 fashion leader

Today’s financial results run for the year to 1 February. In other words, they belong to a different world altogether. Pre-tax profits rose 3% to £348.5m with revenues up 30% to £6.1bn. The next set of results will not be so good.

JD Sports Fashion has been one of the best performing stocks on the FTSE 100. If you had invested £2k exactly 10 years ago you would have almost £36,000 now. Today’s investors cannot expect a repeat showing from what is now a major blue-chip with a market cap of £6.54bn. However, it is finding growth opportunities by expanding in Europe, the US and Asia-Pacific.

Inevitably, management warned today that Covid-19 would have a “material impact” on this year’s results. It has refused to pay landlords during the lockdown and has demanded reductions and rent holidays.

Executive chairman Peter Cowgill remains optimistic, saying that its “core retail standards and commercial disciplines” will help it regain lost momentum, despite uncertainty over consumer behaviour and footfall.

The JD Sports Fashion share price is recovering from the crash, but still trades more than 20% down on its pre-crash peak. Falling incomes and unemployment will hit future sales and that’s a worry for a stock that still trades at 45 times forecast earnings. You might consider investing £1k of your £2k into this stock, but you can find much bigger bargains today.

Shares in Premier Inn owner Whitbread (LSE: WTB) fell almost 5% this morning after it reported a 79.4% drop in first-quarter UK and international sales, but what did investors expect? The vast majority of its UK and German hotels and restaurants were shut from the end of March.

Or invest your full £2k here

More than 270 UK hotels and 24 restaurants have now reopened. All 19 operational hotels are now open in Germany, including 13 that were refurbished and rebranded as Premier Inn during lockdown

Chief executive Allison Brittain reported “good demand for the summer months” in key tourist destinations, although London has underperformed. Last month’s £1bn rights issue will boost its balance sheet and allow it to withstand a long period of low revenues.

The Whitbread share price is still down more than 40% from its January peak and looks a bargain. I think the market is being harsh on a steady long-term FTSE 100 buy-and-hold.

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These 2 FTSE 100 stocks grew more than 3,000% in the last decade! Here’s what I’d do now

Harvey Jones — Mon, 30 Dec 2019 11:12:16 +0000

Wow. Just wow. The best performing stock on the FTSE 100 over the past decade has grown by an incredible 3,200%, according to new research by wealth platform AJ Bell.

If you are not impressed by that number, try this one instead.

If you had invested £1,000 in this particular stock on January 1 2010, you would have had a whopping £32,000 by 18 December this year (with dividends reinvested), which might have made you feel better as you navigated doing that last minute Christmas shopping.

Sporty stuff

So what is this mighty 30-plus bagger? A round of applause, please, for branded sportswear, fashion and outdoors retail specialist JD Sports Fashion (LSE: JD).

Its performance is nothing short of phenomenal, given that this was such a tough decade for retailers, as shoppers abandoned the high street to spend yet more time in front of their screens, and price growth outpaced wages for most of the decade.

Kicking yourself for missing out? You’re not the only one, my colleague Paul Summers wished he had bought this classy business too.

JD Sports was relatively small beer at the start of the decade. Russ Mould, investment director at AJ Bell, says that isn’t surprising, quoting legendary investor Jim Slater’s mantra that ‘elephants don’t gallop’: “The established giants of the FTSE 100 simply can’t grow fast enough to necessarily generate these sorts of meteoric returns,” Mould said.

JD Sports only joined the FTSE 100 this summer but has continued its winning streak, rising another 38% in the last six months, lifting its market cap to almost £8bn.

Obviously, the big money has now been made. If JD Sports rose another 3,200% in the next 10 years its market cap would hit £264bn, and although it is expanding its template globally with much success, I can’t see that happening.

The JD Sports share price now trades at 23.5 times earnings, comfortably above the FTSE 100 average valuation of just over 18 times, but not massively pricey. There are signs of the inevitable slowdown, as earnings growth of 58% 55% and 32% in the three years to 2018 are set to fall to 17% in 2020 and 13% in 2021.

That is still pretty good going, though. I’d buy and hold it for the next decade.

Ashtead Group

The second-best performing FTSE 100 stock over the same period was equipment rental firm Ashtead Group (LSE: AHT), close behind after growing a mind-boggling 3,110%. A repeat over the next decade would lift its market cap from £11bn to £353bn, so again, it ain’t gonna happen.

Ashtead generates 90% of its revenues through its US subsidiary Sunbelt, so has benefited from the booming economy stateside. That may be a problem as the IMF predicts growth will fall from 2.4% this year to 2.1% in 2020, although US Federal Reserve rate cuts and a US-China trade deal may keep the party going a little while longer.

The firm has increased its dividend every year for the last decade, so although the current yield of 1.8% seems low, you can brace yourself for plenty of progression. Especially since the payout is covered a massive 4.6 times by earnings.

The Ashtead share price looks stupendously cheap at 11.7 times forward earnings, although again, earnings are slowing. After years of growth measured at more than 20% or 30%, we are looking at 13% and 9% over the next two years.

At today’s valuation, it still looks a buy to me. Now roll on 2020.

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These 2 FTSE 100 stocks are up 750% and 100% over five years, and I’d buy them both

Harvey Jones — Mon, 25 Nov 2019 09:34:36 +0000

Retail fashion/sportwear chain JD Sports Fashion (LSE: JD) is up an incredible 750% in the past five years, against growth of around 10% across the FTSE 100 as a whole. You don’t find many blue-chip stocks with this kind of growth profile, making it difficult to resist.

Good sports

What makes this even more impressive is that JD operates in the embattled high street retail sector, which is floundering as shoppers head online. Its market-cap now stands at an impressive £7.66bn – the last time I looked at the stock, in mid-September, it was just £6.6bn, as the growth continues without pause. How has it succeeded where so many have come unstuck?

The obvious answer is by bringing in a lot of money – its recent set of interims showed six-month revenues up 47% to £2.72bn. This is down to its diversified product range, which embraces both sportswear and casual fashion, including tie-ups with key brands such as Nike and Adidas, and solid outdoor brands Blacks and Millets.

Run of success

JD doesn’t just operate in the UK, but is expanding across Europe, Asia-Pacific and the US, which gives it geographical diversification and plenty of scope for international growth. Better still, it can beat off the internet threat with a successful website operation of its own.

There’s a catch – the stock now trades at a pricey 23.7 times forward earnings, and those earnings look set to slow. Over the last three years, they have grown by 58%, 55%, and 13%. This year looks flat, City analysts reckon, and although it will quickly return to growth, this will be at a slower pace, 16% in 2020 and 12% in 2021.

Given the high valuation, any disappointments could weigh on the JD share price. This remains a difficult stock to bet against though, and with that proviso I’ll still call it a buy.

This stock’s plugged in too

Everything is relative. Normally, I’d be raving about fellow FTSE 100 stock Ferguson (LSE: FERG), whose share price has soared 101% in five years, but that growth looks positively sluggish when set alongside JD Sports Fashion.

Don’t let that put you off, the multinational plumbing and heating products distributor has a strong track record of share price and dividend growth. The £15.6bn group generates 92% of its trading profits from the US, with the remaining 8% split evenly between the UK and Canada, giving you direct exposure to the US economy, but with a London listing.

The Ferguson share price has continued to climb this year, helped by the Fed’s recent interest rate cuts, which should maintain US growth and support its property market, which drives demand for Ferguson’s products.

The stock currently trades at 15.8 times forward earnings, which isn’t particularly demanding, especially since it has delivered healthy double-digit earnings per share growth over the last three years.

Those earnings also look set to slow, but otherwise the stock looks solid for now, and its forecast yield of 2.6% is nicely covered 2.5 times, which holds out the promise of more progression on that front.

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£6k to invest? These three growth champions are my top buys for 2020!

Rupert Hargreaves — Fri, 08 Nov 2019 10:20:51 +0000

When it comes to choosing companies for your retirement portfolio, I think it’s best to stick with high-quality growth stocks with robust track records of producing returns for investors alongside a durable competitive advantage — businesses like Dechra Pharmaceuticals (LSE: DPH).

Unique business

Dechra is a relatively unique business. It is one of the world’s largest producers of veterinary medicines, a highly specialist but booming market. Over the past six years, the company’s sales have grown at a compound annual rate of 20%, while earnings per share have surged from just 18p in 2014 to an estimated 98p for 2020. The dividend to shareholders has more than doubled over the past six years.

I think this trend is going to continue. People are willing to spend more and more on their pets, and they’re not willing to accept just any old pharmaceutical products. Vets and consumers want the highest quality products.

What’s more, Dechra’s products are protected by patents, and it is spending £25m every year in research and development to stay ahead of its competitors (R&D has increased in line with sales over the past five years).

City analysts are expecting earnings growth of 64% in 2020 and 12% for 2021. The stock currently supports a dividend yield of 1.3%.

Explosive growth

JD Sports Fashion (LSE: JD) is another investment I think could help you build a million-pound pension pot. In my opinion, this is one of the best-run businesses on the market.

Sales have increased at a compound annual rate of 31% over the past five years and, during the past 10 years, the stock price has risen from around 10p to 746p at the time of writing, a compound annual return of 54%.

JD Sports has been particularly successful in attracting young, wealthier consumers, and it’s just starting to expand in the United States. Last year, it bought the Finish Line shoe store chain for £400m in this market and the benefits are already starting to show through.

Net profit is expected to expand at a double-digit rate for the next two years and, considering the company’s growth track record, I reckon it’s highly likely growth won’t stop there. JD Sports seems to have cracked the code when it comes to sports/casualwear retailing. I reckon the firm can repeat the success it has had over the last decade in the next.

Growing market

My last retirement millionaire-maker is the internet security business Avast (LSE: AVST). According to various sources, the size of the global internet security market is expected to hit around $250bn by the middle of the next decade. Avast is well-positioned to grab a significant share of this market as one of the primary providers of antivirus software for the personal and small business market.

This growth suggests that even if Avast doesn’t grow its market share, sales have the potential to expand at an annual rate of 10-11% for the foreseeable future. Because the company’s operating profit margins are nearly 40%, this growth should drop straight to the bottom line.

The stock might look expensive as it’s currently trading at a forward P/E of 17.8, although considering the market available to the company and the projected growth in demand for internet security software over the next five years, I think this is a price worth paying.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

JD Sports Fashion’s 700% share price growth makes it a winning buy for me

Harvey Jones — Tue, 10 Sep 2019 14:13:49 +0000

High street retail crisis? What crisis? If mainstream UK retail is in meltdown, nobody got round to telling JD Sports Fashion (LSE: JD). Its stock is up almost 8% at time of writing as it puts on another burst of pace following publication of its interim results for the 26 weeks to 3 August.

JD for me

Today’s surge will be a familiar feeling for long-term investors in JD Sports (and how I wish I was one of them). The stock is up almost 700% in the last five years, an incredible performance that drove it into the FTSE 100 in June.

This also puts into perspective all the whining and grumbling from traditional retailers who cannot keep up with changing consumer fashions.

First, please don’t confuse JD Sports with Mike Ashley’s woeful Sports Direct, (which remain shares to avoid at all costs). They may be rivals but there is only one winner. JD combines sports, fashion and outdoor brands (including high street stalwarts Blacks and Millets) to blistering effect, with revenues up 47% to £2.72bn in the last six months.

Fast fashion

The group is also expanding internationally, with a net increase of 23 JD stores across mainland Europe, seven in Asia-Pacific and six in the US, where the physical stores are now complemented by a trading website.

Total life-for-like sales growth in global Sports Fashion fascias hit 12%, including “highly encouraging growth of more than 10% in the core UK and Ireland Sports fascias.”

Brexit chaos? What Brexit chaos? JD Sports also toasted “another record result for the half year with group EBITDA on a comparable accounting basis increased by 37% to £235.2m,” with profit before tax and exceptional items on a comparable accounting basis increasing 36% to £166.2m.

Sports for all

Executive chairman Peter Cowgill expects to deliver results “at the mid-point of expectations,” saying the group’s multi-channel proposition has helped it sidestep UK retail challenges, and puts it in good shape to withstand Brexit.

The group may call itself the “undisputed king of trainers,” but Millennials and Generation Z customers can’t get enough of its T-shirts, hoodies, tracksuits and other athleisure. JD Sports just isn’t slowing down.

It now boasts a market-cap of £6.6bn and growth prospects look promising, which may justify its current elevated forward valuation of 19.4 times earnings, and PEG of 1.3. This is a pure growth play, the forecast yield is just 0.3%, but that makes a refreshing alternative to all the high dividend value traps clogging up the FTSE 100 without going anywhere, preferring to buy back their own shares than invest in future growth.

JD Sports has even found time to rescue former Oasis front man Liam Gallagher’s boutique fashion chain Pretty Green from administration, and put it to work.

The danger with growth stocks like these is that you’ve missed the real excitement, as I couldn’t see the JD Sports share price growing another 700% from here – that would lift its market-cap to £46bn, bigger than Reckitt Benckiser, Vodafone, Lloyds and Prudential.

Growth rates may slow – there can’t be that much money in trainers can there? – but it can continue to show the FTSE 100 a clean pair of heels.

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3 FTSE 100 stocks I think are worth watching in September

Paul Summers — Wed, 28 Aug 2019 10:57:36 +0000

Given the growing possibility of a no-deal EU exit and the implications this could have for consumer confidence, it’s fair to say that the numbers from major retailers will be coming under more scrutiny than ever before. Three such firms report to the market next month.

Pre-brexit boost?

Kicking things off is Primark-owner Associated British Foods (LSE: ABF) with the £18bn cap scheduled to issue a pre-close trading update on 9 September.

Back in July, it revealed a 3% rise in group revenue at constant currency while also saying that it expected “good profit growth” at its value-focused clothing business for the full financial year. Considering the recent spate of hot weather hitting the UK, I would be surprised if this wasn’t the case. Positively, the company also saw no reason to change its outlook with earning per share on par with that achieved in the previous year.

At 17 times earnings and offering a 2.1% dividend yield, Associated British Foods is neither cheap relative to some of its high street peers nor particularly attractive for income seekers. Nevertheless, the diversified business model does make it arguably more defensive than most, even if AB Sugar continues to underperform.

Next up on 10 September are half-year results from one of the newer entrants to the market’s premier division, namely sports fashion and outdoor brand purveyor JD Sports (LSE: JD). Those holding the company in their portfolios have had a superb 2019 so far with the shares rising 72% to date.

In its last announcement in July (coinciding with its AGM), the company stated that it had “continued to achieve encouraging like-for-like sales growth both in the UK and internationally”. Perhaps most importantly, JD’s management also said that headline pre-tax profit for the full-year would likely be “at least equal” to what analysts were predicting. Should it beat those expectations next month, expect the share price to continue rising.

JD’s stocks currently trade on almost 19 times forecast earnings making it relatively expensive compared to peers. Despite this, I think that’s still a reasonable valuation for such a quality outfit that generates great returns on the money it invests, has net cash and is rapidly opening new stores around the world. Those investing for income should probably steer clear though. JD is expected to yield just 0.3% in the current financial year.

Next up

Completing our trio will be half-year results from Next (LSE: NXT) on 19 September. Like JD Sports, its shares have gone from strength to strength in 2019, rising 45% to date. And like JD Sports, I suspect there will be nothing for those already holding to worry about based on its most recent trading statement.

A little under a month ago, Next surprised the market by revealing a 4% rise in full-price sales over Q2 and that it was consequently more than doubling its guidance for the full-year to 3.6%. Although sales continue to fall in its stores, the £8bn cap is offsetting this through online growth, helped by its decision to sell clothing from other retailers such as Superdry. Again, given the recent great weather, expectations might even be exceeded next month.

At slightly less than 13 times earnings, Next is quite a bit cheaper than both JD and ABF making it the clear choice for bargain hunters. The 3% yield, easily covered by profits, is also the highest of all three.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods. 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.

Looking for stocks to buy? I like these 3 companies

Rupert Hargreaves — Sun, 18 Aug 2019 11:30:27 +0000

If you are looking for stocks to buy in the current market environment, then I highly recommend taking a closer look at Dunelm Group (LSE: DNLM).

Retail companies are really out of fashion right now, but Dunelm isn’t a traditional retail business. Its unique offering has helped the company grab market share and outperform most of its peers for the past six years. And it doesn’t look as if this trend is going to come to an end any time soon.

Beating expectations

Since 2013, Dunelm’s sales have grown at a compound annual rate of around 9%. This year, the company is on track to blast past this average.

In the company’s last trading update before its fiscal full-year results, management revealed like-for-like sales rose 15.4% in the fiscal fourth quarter, with a 37% jump in online revenue.

Following this performance, Dunelm hiked its profit expectations for the full year. City analysts are now expecting the company to report earnings growth of 19% for fiscal 2019, making Dunelm one of a handful of retailers that are still seeing earnings and sales growth.

This performance is the primary reason why I am confident Dunelm could be a great addition to your portfolio today.

Unique relationship

Another retailer that is also outperforming in a tough environment is JD Sports Fashion (LSE: JD).

This multi-channel retailer of sports fashion is, according to current City targets, on track to report total sales of £5.8bn for its current financial year. If the company manages to hit this lofty target, it will have increased sales by 380% in six years. Over the same time frame, earnings per share have risen at a compound annual rate of 36%.

JD’s secret to success lies in its connections with suppliers. It has agreements with major sports fashion brands, which allow the company first dibs on any new styles. This means JD is usually the first port of call for the fashion-conscious. Further, the firm offers these products at attractive prices.

As long as the business does not deviate from its formula for success, I think it is highly likely JD will continue to outperform competitors for the foreseeable future. A P/E of 18.7 makes this one of the more expensive retailers on the London market, but I think it is a price worth paying for this first-class business.

Development pipeline

Moving away from the retail sector, I reckon student accommodation provider Unite Group (LSE: UTG) could be a stock worth buying in the current environment.

As one of the largest student landlords in the country, Unite has unrivalled economies of scale in the accommodation business. It is also a pretty defensive business. Even if the global economy enters a depression tomorrow, students will still want to go to university, meaning Unite should be relatively unaffected.

Unite’s pipeline of new developments and acquisitions promises plenty of growth in the years ahead. Last week the company announced that it had acquired a new 620-bed development site in Nottingham as part of its ongoing target to maintain a development pipeline of 2,000 beds a year.

Based on the company’s development pipeline and existing properties, City analysts believe the firm has the potential to pay out 33p per share in dividends this year, giving a potential dividend yield of 3.2%. The City thinks the payout could rise a further 12% in 2020, offering a yield of 3.6%.

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Sports Direct shares: why I’d avoid them at all costs

Edward Sheldon, CFA — Tue, 30 Jul 2019 08:01:00 +0000

Back in late 2016, I was cautiously optimistic about the outlook for Sports Direct (LSE: SPD) shares. They looked cheap, and with Mike Ashley planning to turn the retail giant into the ‘Selfridges of sports retail’ I thought there was a chance the shares could outperform.

However, fast forward to today, and my thoughts on the stock are very different. It’s become apparent that this is a company with some serious issues, and as such, the shares now have very little investment appeal, in my view. Here’s a look at a few of the company’s problems.

Flawed business model

Let’s start with the business model. If you’ve ever been into a Sports Direct store, you’ll know that there’s a strong focus on cheaper brands such as Karrimor, Dunlop, and Slazenger. If you’re looking for a top-of-the-range pair of running shoes from the likes of Nike, Adidas, or Asics, you’re going to struggle. Personally, I think this focus on cheaper brands is backfiring in a massive way.

The demand for premium sporting goods and apparel has never been greater. Just look at the share prices of Nike and Adidas – both stocks are up nearly 50% in the last two years alone. Similarly, look at JD Sports Fashion, which focuses heavily on these brands. Its shares up are nearly 80% in two years. Yet Sports Direct’s share price has fallen around 45% over the same period.

Something is clearly wrong and we can’t blame the UK high street here as Sports Direct has a strong online presence. For a company whose mission statement is “To become Europe’s leading ELEVATED Sporting Goods Retailer”, it has a long way to go.

Toxic corporate governance

The next main problem with Sports Direct is its corporate governance (the way the company is controlled). In short, it stinks. Not only did the company delay its final results on 18 July (a huge red flag) but the group then failed to publish its results on time last Friday morning and didn’t end up publishing them until 5.19pm – nearly an hour after the market closed.

Naturally, investors were unimpressed with this development, with Neil Wilson, market analyst at Markets.com, saying “it’s a total and utter shambles”, and David Cumming, head of UK equities at Aviva Investors stating that “Sports Direct is almost a case study in failed corporate governance.”

This kind of activity, combined with the fact there’s no dividend, demonstrates that there’s literally zero regard for shareholders.

Plenty more issues

There are plenty of other concerning issues too. For example, the full-year results themselves were not good. For the year, underlying basic earnings per share fell 8% and for FY2020, the company abandoned all guidance. In addition, the group announced that it has been hit with a £605m tax bill from Belgian Authorities and that CFO Jon Kempster has resigned.

Then, there are Mike Ashley’s random spending sprees. The investment in Debenhams backfired and in relation to House of Fraser, Sports Direct has said: “The problems are nothing short of terminal in nature.”

Finally, there appear to be conflicts between the company and auditors, with Ashley stating: “Our early discussions with the Big Four have thrown up some barriers.”

These are all red flags. Putting everything together, the company is a basket case, in my view. I’d avoid the stock at all costs.

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Edward Sheldon owns shares in JD Sports Fashion. The Motley Fool UK owns shares of and has recommended Nike. 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.

Have £10k to spend? 3 dividend growth stocks I think could make you an ISA millionaire

Royston Wild — Sun, 28 Jul 2019 08:15:44 +0000

Times are tough for UK retailers, though you wouldn’t know if it you have a look at the Greggs (LSE: GRG) share price. It’s ballooned in excess of 150% over the past 12 months, and this has provided the bedrock for some stunning shareholder returns in that time.

In fact, total shareholder gains during the past 12 months have surged 156.4%, with Greggs’ decision to supercharge dividends (the payout for 2018 surged a whopping 11%) also helping that eye-popping increase.

If the baker were able to repeat its performance of the past year, a £10,000 investment into a Stocks and Shares ISA right now (with dividends reinvested) would turn this into £1,108,128 in a mere FIVE years. And it’d take a braver man than me to bet against Greggs delivering some seriously hefty returns, given the pace at which its delicious edibles are flying off the shelves.

More millions?

Returns have also swelled for individuals holding shares of JD Sports Fashion (LSE: JD), gains which have been driven primarily by the company’s market value swelling more than three-quarters over the last year. This means total shareholder gains have clocked in at a whopping 76.7%.

In the event of this other FTSE 250 company being able to repeat the trick in coming years, a £10k investment in the sportswear retailer today would deliver returns of £1,679,303 after nine years. And who’d rule out JD delivering some seriously titanic returns as it continues on its rapid store expansion programme?

Thde company is a rare bright spot in the British retail segment. Profits at the business sprinted to fresh records last year, thanks in large part to the further progress it’s making on foreign shores. And it opened 18 new stores across Europe, Asia Pacific and North America in the five or so months to 29 June to keep the run going.

One final thing. JD hiked the full-year dividend 5% in the last fiscal period. I wouldn’t bet against rewards continuing to rise each and every year and at a healthy pace too, in light of the firm’s very bright long-term earnings outlook.

Another route to big riches

Along with JD and Greggs, I reckon Diageo (LSE: DGE) is another dividend raiser in great shape to provide some truly titanic returns in the years ahead. It’s been a reliable payout raiser year after year for decades now and was at it again late last week when it also increased the full-year reward by a chunky 5%.

I’ve put my money where my mouth is with this particular stock and stuck it in my own personal ISA. Thanks to Guinness, Captain Morgan and its packed portfolio of much-loved drinks, not to mention its broad geographic footprint, you can rely on the FTSE 100 firm to raise profits consistently and almost without exception. And this lays the base for shareholders to expect some big returns.

A rampant share price means that total gains at Diageo have registered at an impressive 20.6% over the past 12 months, a return which, if replicated over the next 13 years, would turbocharge just £10,000 into a gigantic £1,052,150. It shouldn’t be a surprise when I say that Diageo’s a share I never plan to sell.

The post Have £10k to spend? 3 dividend growth stocks I think could make you an ISA millionaire appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Diageo. The Motley Fool UK has recommended Diageo. 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.