Global portfolio

What really stands out to me with JD is its recent acquisitions. Not only do I think its expansion strategy will provide long-term value, but it also seems to be providing the firm with an instant boost. Shoe Palace and DTLR, acquired in December 2020 and March 2021, respectively, generated £72.9m for the firm, according to its half-year results. For me, that’s an attractive factor when considering adding the FTSE 100 stock to my portfolio. Should returns like this continue, I would expect to see a further rise in the share price.

The £70m injection is only a slither of the impressive half-year results. Revenues were at nearly £3.9bn for the period, over a 50% increase from 2020, while operating profit excluding exceptional items was up by almost 400% at £471.7m. Profit before tax and exceptional items also rose to £170.8m in its core market (the UK and Republic of Ireland), a 225% increase from 2020 and 48% from 2019. For a potential investor like myself, these are appealing figures.

What also attracts me is the size of its portfolio. Globally, it has over 3,300 stores in 29 territories under its umbrella. This opens up an array of opportunities. And as the business continues to expand, I think shareholders will begin to see greater benefits. Yet this large exposure can also be a risk as we have seen so evidently with the pandemic over the past 18 months as sores were forced to close.

JD concerns

What does concern me, and as my fellow Fool Royston Roche highlighted, is suppliers/competitors such as Nike and Adidas. The fact they’re selling directly to customers may allow them to benefit from better margins, although JD does have exceptionally good relationships with both of these brands. Also, direct rival Sports Direct (owned by Frasers Group) is expanding and elevating its offer, and boss Mike Ashley may now be more determined to do so after the recent sale of Newcastle United. The firm’s plan to expand into Europe could damage JD’s market share. This is a major issue for me as it could negatively impact the JD share price.

Why I would buy

Although I’ve raised concerns, I do have a bullish outlook on JD. The latest set of results provided will no doubt give shareholders a confidence boost, but what most impresses me is the return from its two latest acquisitions. With such a large portfolio, I think the business could see real benefits from its global presence. As such, I would add JD to my portfolio today.

The post Why I’d buy this FTSE 100 stock right now appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. 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.

Despite the odd wobble along the way, the FTSE 100 is now up 19% in the last 12 months. Naturally, some of its constituents have done far better. Can this continue in September when results fly in thick and fast though? Here are three companies I’ll be keeping an eye on. 

JD Sports

Having climbed 41% over the last year, shares in sportswear retailer JD Sports (LSE: JD) are now well above their pre-Covid levels. It’s easy to see why. 

Back in July, the company said it had seen good post-lockdown trading. Business was particularly healthy in the US. As such, JD felt comfortable raising guidance on full-year pre-tax profit to “no less than £550m” from £475m-£500m previously. This would represent a 31% increase on that logged for 2020/21. 

Valuation-wise, JD shares trade on 26 times earnings. That’s lower than other shares in the FTSE 100. However, I don’t think it can even be described as cheap, particularly as margins in this business are very average. Overseas sales may also suffer if Covid-19 infections begin rising again. The possibility of brands such as Nike and Adidas trying to lure shoppers to their own sites is another threat.

Interim numbers arrive on 14 September. As good a company JD is, I’ll be watching next month rather than buying. 

Kingfisher

B&Q owner Kingfisher (LSE: KGF) reports half-year figures on 21 September. Unless something has gone seriously awry, these should be very robust. After all, UK lockdowns, a shift in working patterns, and a white-hot house market have all played into the company’s hands.  

A couple of months ago, KGF reported that it continued to see high levels and demand from new and existing customers. As a result, like-for-like sales growth for the first six months of the financial year would now be 22%, rather than “mid-to-high teens.“

Adjusted pre-tax profit would also be in the range of £645m-£660m — a healthy increase from the £580m-£600m previously predicted.  

The question however, is how long will the home improvement boom persist. Having spent so much time inside, I wonder if people will now be more concerned with going on holiday rather than taking on fresh DIY jobs. The arrival of colder weather could also put (external) projects on ice. Factor in tough comparatives and I’m wary of buying now.

Next

Retailer Next (LSE: NXT) is a final FTSE 100 stock I’ll be watching (but not buying) in September. Like the others, shares in the clothing and homewares top-tier titan have done well in the past year. A gain of 31% certainly isn’t to be sniffed at, especially as this still comfortably beats the index.

There’s little doubt in my mind that Next is a quality business. Last year aside, it’s long generated strong returns on capital and high margins. Led by Simon Wolfson, the management team is also top drawer.

Again however, the likely switch to ‘experience’ spending leads me to think that the Next share price may have peaked. Indeed, brokerage Credit Suisse recently said that it expects clothing sales to lag the more general retail revival in the rest of 2021.

Since I already have exposure to the clothing market via a certain AIM-listed giant, Next shares aren’t for me right now. However, I will certainly be scrutinising those half-year numbers when they hit the market on 29 September. 

The post 3 FTSE 100 stocks I’m watching in September appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Next. 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.

The last year or so has been decent for many London-listed companies. However, some lower down the market spectrum have absolutely shot the lights out. Here are two examples, both of which still look like great UK shares to buy now.

Growing at a fast clip

One business that’s been going great guns recently is Clipper Logistics (LSE: CLG). The self-styled ‘retail logistics expert’ and returns manager has benefitted from the explosion in e-commerce in recent years. Multiple UK lockdowns have further boosted trading (and the share price).

June’s update provided a snapshot of just how well things have been going. Revenue for the full year to the end of April is now expected to come in at £698m. That’s a 39% jump on the previous year, partly due to the company winning new contracts with Joules and JD Sports, among others.

In addition to this, CLG recently signed a three-year extension to its contract with ASOS to handle the latter’s returns on the continent.

Taking all this into account, it’s perhaps no surprise Clipper believes EBIT (earnings before tax and interest) for FY22 and FY23 will now be ahead of consensus estimates “by mid-single-digit percentages in both years.“

Right now, the stock trades on 29 times forecast earnings. That’s pretty high, especially as a rise in unemployment post-furlough could prove a setback for retailers and possibly Clipper. Margins, while improving, are also fairly low in this kind of work.

However, this valuation seems more reasonable when looking at the company’s growth strategy. In addition to building its presence in Europe, the £800m-cap plans to launch a B2B online marketplace in September. This will target buyers from the “highly fragmented” elderly care market. Should it prove successful, Clipper may consider expanding the platform into other sectors.

A rapidly reducing debt pile is another positive.

Lighting up the market

A second company whose share price has been soaring has been Luceco (LSE: LUCE). The company is a market leader in LED lighting, portable power products and wiring accessories. Brands include Luceco LED, BG Electrical and Masterplug.

Half-year results are due early next month. However, we already know from July’s update they’ll be decent. Back then, LUCE announced that demand for its products had been “stronger and broader than expected.“

As a result, it now expects to hit revenue of £108m for the first six months of 2021. Adjusted operating profit is likely to come in at £19m. Both numbers are slight improvements on previous guidance.

To round things off, Luceco said figures for the whole of 2021 would now be ahead of what analysts had been predicting. Indeed, CEO John Hornby expects “another year of record results.” No wonder the shares have been in such great form.

But how much is this in the price? Personally, I don’t think the valuation of 20 times earnings is excessive. As such, I’d feel comfortable adding Luceco to my list of UK shares to buy.

This isn’t to say it’ll be plain-sailing. Despite managing to protect margins so far, “industry-wide” cost inflation looks like being a headwind for a while. The home improvement boom will surely moderate at some point too.

Still, there’s a very secure dividend to compensate for any turbulence.

The post 2 ‘unstoppable’ UK shares to buy now appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS, Clipper Logistics, and Joules 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.

When I saw the recent results of retailer Superdry, I wanted to find more long-term buy-and-hold opportunities in the clothing retail sector. I looked at JD Sports (LSE: JD) and Next (LSE: NXT). 

JD Sports Fashion

When it comes to British leaders in sports fashion, JD Sports is up there. This FTSE 100 retail stock has been — like the rest of the retail sector globally — undergoing a significant shift to omnichannel, while its share price has jumped almost 70% in the past year, from 539p to 916p.

Impressively, despite the widespread closure of its physical locations, JD Sports made an enviable pre-tax profit of £421.3m in 2020 — down just 5% year-on-year (YoY). What’s more, rapid e-commerce growth helped overall revenue increase 1% YoY to £6.16bn. 

I am very excited by the prospect of store reopenings, which should further boost JD Sports’ income stream. The FTSE 100 member has already proven that it can be a dual-front e-commerce/brick-and-mortar revenue-generating machine. This could grow even more thanks to international growth, with 55% of total sales now coming from both mainland Europe and the US.  

A couple of things concern me though. The sports fashion industry is hugely competitive, and in order to expand internationally, as it has been doing, it will need to spend more money. This could lead to overstretched resources if JD is not careful. Another concern is the rumours that long-time executive chairman/CEO Peter Cowgill may be stepping down from day-to-day control and handing over to a new CEO. This could cause some short-term volatility as is common following upper management shake-ups.

I’m still very bullish on this retailer, and at around 916p now, I believe it still has some runway for growth as the economy reopens. 

Next

Considered to be one of the top UK reopening stocks to buy, the Next share price is on the rise. In the past year, the British retail firm has risen more than 70% from 4,796p to 8,320p. 

This top FTSE 100 retailer, like JD Sports, fared well in 2020, despite the pandemic. While its stores were closed, online sales surged, which saw revenue fall just 17% from £4.27bn to £3.53bn. What’s more, it managed to retain a pre-tax profit of £342m, despite increased Covid-19 costs. 

Next’s management’s bullish forecast for the coming year. It recently raised its central guidance for a full-year profit before tax by £20m to £720m. In fact, according to its first-quarter results, Next is already back to pre-pandemic levels of business, with a comprehensive expansion policy in place. This includes standalone premium beauty stores, deals with Laura Ashley and Victoria’s secret, more third-party brands added to its Label offer, and growing its e-commerce solution for external businesses.

Much like JD though, Next operates in a massively competitive market. It will need to invest heavily in its marketing and online retail just to stay ahead of the competition, all of which will impact its ability to generate meaningful profits.  

I am still bullish about Next though, and its brand power, which has seen it rise to the top of its market and remain in the FTSE 100.

The post 2 top FTSE 100 retail stocks I’d buy now appeared first on The Twelfth Magpie.

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Jamie Adams holds no position in any companies mentioned above. The Motley Fool UK owns shares of Next. 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.

My retirement plan is two-pronged: first, I want to invest in a high-growth stock that I can buy now and watch the gains tick over. And I also want a safe dividend-payer that can provide passive income and security.

So as I ponder that future deckchair on a porch somewhere with an iced tea in hand, I’m thinking of JD Sports Fashion (LSE: JD) and GlaxoSmithKline (LSE: GSK). 

JD Sports Fashion

My “wildcard” bet is a bit riskier than the average retirement stock. Retail is undergoing a significant shift to e-commerce and competition is fierce. However, JD Sports’ share price has soared more than 75% in the past year, from 512p to 907p.

This kind of growth intrigues me, so I began digging into this FTSE 100 company’s financials. 2020 revenue rose just under 1% to £6.16bn, despite temporary store closures. Even with increased Covid-19 costs, it managed to score a pre-tax profit of £421.3m — down just 5% year-on-year. What excites me for the future is that 55% of the company’s total sales worldwide came from the US and mainland Europe in 2020. This shows a strong international presence that can be built upon. I think JD can become one of the top sports retailers on the planet, and has plenty of growth in it yet.

I still have some concerns though. While the risks of it are waning, I’m worried about the impact of a prolonged pandemic. Or worse, another pandemic in the future — I’m not planning on retiring any time soon, after all. An increase in direct-to-consumer sales from major brands could also hurt JD. With retail e-commerce accelerating rapidly, consumers may simply go straight to Nike or Adidas rather than shop at JD. Hopefully, there will be enough market share to go around though and JD did do every well in e-commerce in its latest year. 

GlaxoSmithKline 

Despite being one of the FTSE 100’s worst-performing shares over a year, GlaxoSmithKline is on my retirement watch list too. At its current price of 1,350p, this pharmaceutical giant is down more than 10% in the past 12 months. The FTSE 100 member is a dividend-paying stock, with a yield of 5.7%, which means passive income in my later years.

While GSK missed out on last year’s pharma rally, this was a one-off in my opinion. its dip was partly due to its regular vaccines business suffering during lockdown as people stayed away from doctors’ surgeries. The group’s turnaround is making progress. Sales of new pharmaceuticals rose by 12% to £2.5bn in Q3, accounting for 30% of all revenue. Glaxo also remained very profitable, with an operating margin of 22%. As the sixth-largest pharma company in the world, I believe GSK can remain at the top and provide my retirement with a passive income stream.

GSK is far from risk-free though, with many changes on the horizon. It plans to split in two in 2022 (the two ‘new’ businesses will focus on BioPharma and Consumer Healthcare), which may dent earnings. Its dividend is also set to fall for the first time in 15 years, which could hurt my retirement plans. This corporate restructuring could have mixed results and may lead to worse returns.

The post Why I’m buying these 2 FTSE 100 shares for retirement appeared first on The Twelfth Magpie.

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Jamie Adams has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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.

The reopening of high streets next month could lead to some big moves in some retail stocks. Especially as stores will now be permitted to stay open until 10 pm. Today, I’m looking at three examples from the FTSE 100, all of which just happen to be reporting to the market in April. 

Next

First out of the blocks is clothing giant Next (LSE: NXT). It’s scheduled to release its latest set of full-year numbers to investors on 1 April.

Based on the performance of its share price over the last year, it’s hard to imagine there’ll be any nasty surprises. The market is always forward-looking and Next’s valuation has more than doubled since April 2020.

There are some that think there’s more to come. Last week, broker RBC upped its share price target to 8,800p on its belief the company will continue to benefit from its online offer, but also its decision to buy stakes in lingerie firm Victoria’s Secret and fashion label Reiss. RBC also suspects it won’t be long before Next restarts dividend payments.

I’m not about to disagree. Next has long possessed all the hallmarks of a great company. That said, it’s worth considering that consumers may direct their cash towards experiences rather than possessions in the coming months. Another potential concern is the possibility that online giants Boohoo and ASOS could steal some of Next’s customer base if their recent acquisitions bear fruit.

JD Sports

A second retailer scheduled to report full-year figures next month is leisurewear seller JD Sports (LSE: JD). Like Next, JD appears to have pivoted to its online offering pretty well during the crisis. It’s also preparing to enter new markets in central and eastern Europe and expand its US footprint.

Also like Next, JD’s share price has recovered strongly over the last year, soaring over 180%. By comparison, the FTSE 100 index is up ‘just’ 30%. Make no mistake, buying quality stocks when everyone else are losing their heads has the potential to be very lucrative. 

Nevertheless, recent comments from executive chairman Peter Cowgill may unnerve a few holders. In an interview with BBC Radio in February, he remarked that Brexit has been “considerably” worse than he had expected. It’ll be interesting to see what the share price reaction is next month if this situation hasn’t improved.

Associated British Foods

A final FTSE 100 retail stock I’ll be watching in April is Associated British Foods (LSE: ABF).

Although nothing can be guaranteed, it’s possible that ABF may do better than most retailers in the weeks ahead. A lack of online presence could mean its Primark stores are more likely to be packed out on 12 April as shoppers look to replace the cheap threads they’ve worn out over multiple lockdowns.

Even if this rush doesn’t materialise, I think ABF shares could still do well. As I explained previously, the company benefits from a degree of sector diversification that most rivals don’t.

Naturally, there’s a flip side. Although the shares haven’t rallied as hard as the other FTSE 100 stocks mentioned, ABF certainly isn’t as cheap to acquire as it once was (26 times forecast earnings). 

On top of this, there’s a chance those who’ve managed to save more during the multiple UK lockdowns will treat themselves to higher-quality clothes with a more sustainable profile rather than ‘disposable’ fast fashion. 

The post 3 FTSE 100 ‘reopening’ shares I’ll be watching in April appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of Next. 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.

Cineworld shares: a horror story

You probably know that 2020 has been something of a horror show for the once-mighty company. It was priced around 220p a pop back in January. But Cineworld shares tumbled 95% to just 21p by March as the coronavirus ravaged the globe and lockdowns were enforced.

Some believe the worst to be over. Broker Peel Hunt, for example, recently slapped a price target of 180p on the stock! But I’m less enthusiastic for now. 

True, many of the company’s sites have now reopened. However, there’s still a dearth of new releases. Likely blockbusters (Top Gun 2, James Bond) have had their release dates put back as studios seek to maximise their investment returns.

News that movie-goers must wear masks when visiting is another setback. Why bother with a trip out when you can have a more comfortable experience via Netflix or Amazon Prime at home?

Ominously, Cineworld shares also remain among the most shorted on the London stock market. The only company more hated is Hammerson — the shopping centre owner-manager. When you consider just how much debt the former has on its books, this isn’t surprising.

Yes, any remotely positive comments from management on the company’s outlook next month could see Cineworld shares rally as shorters are ‘squeezed’ and forced to buy back in. With so much working against it right now, however, there are surely far easier ways of making money on the markets.

A better bet…

Cineworld shares aren’t the investment that’s given holders a rollercoaster ride in 2020. Fast-fashion behemoth Boohoo‘s (LSE: BOO) share price has been jumping all over the (online) shop thanks to an odd mixture of soaring sales and negative publicity.

Interim numbers are due on 30 September. I suspect another big move is on the cards. If recent sales momentum has been maintained, this should be in an upwards direction.

Back in June, the company reported “very strong trading and operational performance“. Despite the coronavirus crisis, it now expected to beat previous market expectations for the full-year. What a contrast to the state of affairs at Cineworld!

On the other hand, accusations of poor pay and working conditions in factories supplying clothes to the company have dented BOO’s reputation. An independent review is in progress but it’s clear investors will be looking for an update on what steps it has taken to rectify things. The share price could be punished again if this is deemed insufficient. 

As a holder, I’m clearly biased on Boohoo’s prospects. Notwithstanding this, I’d be surprised if recent woes prove anything more than temporary. Similar cases have involved retail titans such as Amazon, Associated British Foods (Primark) and JD Sports. They show that no business is beyond reproach, particularly those with links to the rag trade. They’ve all since recovered.

As long as issues are swiftly rectified, a sustained rise in Boohoo’s price looks far more likely than it is for Cineworld shares. 

The post Here’s why I think Cineworld and Boohoo are UK shares to watch in September appeared first on The Twelfth Magpie.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers owns shares in boohoo group. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Associated British Foods and boohoo group and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. 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.

Cheap ISA buy?

The fact that shops are being allowed to reopen does not mean that consumers will be in the mood to spend like there’s no tomorrow, of course. They may, however, feel the need to replace some of their more comfortable ‘lockdown clothing’.

For me, this could be good news for Primark-owner Associated British Foods (LSE: ABF). Say what you like about the wares sold by this company — the fact that you can fill a wardrobe on the cheap could mean it does better than most during a recession.

Another attraction to ABF is that it isn’t solely dependent on the success of its stores — it has its fingers in the grocery, agriculture, sugar, and ingredients markets. This makes it a good ISA option for defensive-minded investors, in my opinion.

True, the shares haven’t done particularly well over the last few years, but consumers’ desire to find value for money in tough times could mark a change in direction. 

If we assume that analyst predictions on earnings in FY21 are still roughly correct, the stock also changes hands at a really-rather-decent valuation of 14 times earnings. 

Quality operator

My second pick of retailers would be FTSE 100 sports and casualwear firm JD Sports (LSE: JD). 

Boasting excellent free cash flow and experienced management, this business looks set to go from strength to strength. Having established itself as a go-to destination for trainer lovers in the UK, it’s now targeting large overseas markets such as the US.

Is a lot of this already priced-in to the shares? Quite probably. Like many stocks, the optimum time to buy was a couple of months ago. From mid-February to mid-March, JD lost two-thirds of its value. The share price has more than doubled since.  

Hindsight is a wonderful thing, of course. Nevertheless, JD is one of only a handful of FTSE 100 stocks I’d feel comfortable holding within an ISA for the very long term. And companies like this rarely stay cheap for long.  

Riding high

My third and final selection is something of a wildcard: bicycle-seller and auto parts retailer Halfords (LSE: HFD).

I’ve actually been very bearish on this company in the past, partly due to its lack of an economic moat. But the coronavirus pandemic has altered my stance somewhat. In case you haven’t noticed, cycling has been hugely popular over recent months as long-distance travel has been prohibited. 

To be clear, I don’t think Halfords is a ‘buy-and-forget’ stock. There’s no guarantee that those who say they now plan to ride to work rather than catch public transport will actually do so. There’s also quite a bit of debt on the balance sheet.

Even so, the next set of numbers released by the company is likely to be very good indeed. Those buying a small amount now for their tax-efficient ISA could still do well. 

The post Have £3,000? Here are 3 stocks I’d buy for my ISA as lockdown lifts appeared first on The Twelfth Magpie.

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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.

With this in mind, here are the top three gainers from the FTSE 100 that you wished you’d bought 12 months ago. 

On the podium

London Stock Exchange (LSE: LSE) has been the third biggest gainer since this time last year, rising 67%. Contrast this with the index that has climbed ‘only’ 7.4% in value. 

Much of this outperformance can be attributed to the company becoming a takeover target. Back in October, however, Hong Kong’s stock exchange withdrew its £32bn bid after the LSE stated that this fell “substantially short” of what it considered to be an appropriate valuation.  Since then, the latter has gone on to report a 12% rise in sales (to £587m) over Q3 and completed the £22bn acquisition of data firm Refinitiv that its suitor was opposed to. 

As a result of the positive momentum witnessed over the last year, LSE’s shares are now changing hands for 35 times earnings, reducing to 30 based on analyst projections for FY20. That seems rather a lot to me, so I wouldn’t be a buyer at the current time. 

Another winner has been engineering, design and information management software provider Aveva (LSE: AVV). Had you bought the stock this time last year and done nothing at all, you’d now be sitting on a gain of 85%. 

One reason for this has been a rise in the proportion of overall revenue that is now reoccurring (from existing clients). Recent results from the company showed this had soared 42.1% over the six months to the end of September.

Like LSE, the only problem is that Aveva’s shares now look prohibitively expensive on 42 times earnings. Should the company achieve the 12% growth expected by analysts in the next financial year, this valuation reduces to 37 times earnings based on the current share price. That’s still high for any stock but particularly so for one whose margins and returns on capital have both significantly fallen in recent years.

By far the best early Christmas present you could have bought yourself last year, however, was retailer JD Sports (LSE: JD). Twelve months later, its share price has more than doubled. Aside from being a superb result for holders considering the carnage in the sector, this is also evidence that you don’t necessarily need to buy into risky small-cap stocks to make good money in the market.

September’s half-year results showed just how well the company is negotiating the pressure on the sector with revenue jumping by 47% to £2.72bn and pre-tax profit 6.6% higher at just under £130m. On top of this, JD commented that its international development continues at pace with a raft of stores opening in Europe, Asia and the US. 

Again, the one question prospective buyers must ask is whether — at 24 times earnings for the current year — all the good news (and some expectation of bumper sales over Christmas) is already priced in to this classy business.

The post If only I’d bought these winning FTSE 100 stocks for my ISA last year appeared first on The Twelfth Magpie.

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Paul Summers 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.

Before I look at why they’ve done so well, and whether I think they can continue to deliver for investors, the table below summarises some relevant data.

As you can see, the Footsie’s flying three operate in different sectors. So we’re looking at company-specific reasons for their high performances, rather than some industry driver floating all boats in one sector.

Increasing enthusiasm

A transformative merger of Aveva and Schneider Electric‘s industrial software business, which completed in March last year, created a global leader in engineering and industrial software. Investors have become increasingly enthusiastic about the prospects for the enlarged group.

Results in May showed a 12% uplift in annual revenue and a 27% increase in adjusted earnings per share (EPS). However, looking ahead, City analysts expect earnings growth to moderate to low teens. Aveva’s forecast P/E of 37.4 is far higher than its ever been in my memory, and I’m unconvinced the growth on offer warrants quite such a high multiple.

It strikes me that even a minor miss on earnings forecasts could see the shares hammered, and that Aveva may have to exceed forecasts to maintain investors’ enthusiasm. As such, I’m minded to avoid the stock at the current level.

Bold move

The LSE share price was already performing strongly this year, before jumping 15% last Monday. This came on the back of news it’s agreed to acquire global provider of financial data and infrastructure Refinitiv in an all-share transaction for a total enterprise value of $27bn.

The deal is a bold move by LSE, and a “compelling” one, according to management. It cites a host of impressive benefits, including “expected adjusted EPS accretion of over 30% in the first full year following completion, increasing in years two and three.” Shareholders are clearly up for it, although with various regulatory approvals also required, completion is not expected until the second half of 2020.

The current-year forecast P/E of 36.3 doesn’t reflect the potential future earnings power of the enlarged business. Still, I’m not sure I’d be buying the stock today, but if I owned it, I’d continue to hold.

Outstanding performer

JD Sports is the top performer, not only in the year to date, but also over the last five years, the latter providing shareholders with a terrific gain of more than 700%. A truly outstanding effort.

A leading retailer of sports, fashion and outdoor brands, its UK growth and strong efficiency metrics put many other retailers to shame. Furthermore, it’s expanding fast internationally, including in the most significant global market of all, following last year’s £396m acquisition of US athleisure chain Finish Line.

JD’s forecast P/E of 18.8 is far lower than Aveva’s and LSE’s, but higher than many retail peers. Deservedly so, in my opinion. Annual low teens EPS growth looks sustainable to me, and with management recently confirming encouraging progress in the US, I rate the stock a ‘buy’.

The post The 3 best performing FTSE 100 stocks of 2019 (so far) appeared first on The Twelfth Magpie.

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G A Chester 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.