I’m betting this beaten-down FTSE 100 growth monster is about to go gangbusters!

Of all the beaten-down growth stocks on the FTSE 100, I decided JD Sports Fashion (LSE: JD.) was best placed to roar back at speed.

The stock had been high on my buy list for years, but I thought I’d missed my chance as it only climbed higher and higher.

So when troubles at key brand Nike, which accounts for almost half of its sales, emerged in 2023, my ears pricked up. And when JD Sports issued a profit warning in January 2024 after a tough Christmas, my index finger twitched. Two weeks later, I clicked the Buy button.

But Christmas 2024 was cruel too, resulting in a second profit warning as the cost-of-living crisis (and Nike’s woes) dragged on.

I’ve now bought the shares on three occasions, at an average entry price of around 101p. There were signs of hope last year, when the shares rallied, but it didn’t last. Still, it did tell me one thing. When JD Sports shares recover, they’ll move at speed.

Shares are struggling

Full-year results published on 21 May this year showed underlying sales down 2%, although profit before tax and adjusting items nudged 4% higher to £923m. Not bad in a volatile retail climate, but investor nerves were still shredded by Donald Trump’s tariffs.

JD Sports said it was working to diversify supply and keep costs down, but admitted shoppers might end up footing the bill. The shares slumped again, and so did my mood.

Just a few days ago, I was sitting on a 25% loss. But oddly, I didn’t feel downcast.

The business still looks fundamentally strong. It doesn’t face the kind of existential threat (quite the reverse actually) that hangs over another portfolio straggler Diageo, for example, imperilled by Gen Z drinking habits and the impact of weight loss drugs.

Ready to recover

On Friday (27 June) I opened my app to find JD Sports had vaulted more than 7% in the morning, topping the FTSE 100 leaderboard.

What sparked the surge? A promising update from Nike overnight. While the American giant posted a 10% drop in full-year revenue, its Q4 sales beat expectations, and the company talked up a recovery in the coming quarter.

Shore Capital noted that JD’s future looked brighter too, thanks to better wholesale order books and improving seasonal trends. If Nike can keep turning the corner, JD should feel the benefit.

It was a nice way to end the week. JD Sports is a big bet for me. Although the shares are still down 35% in a year.

Cautious optimism

Analyst sentiment is encouraging. Of 17 analysts covering the stock, eight rate it a strong Buy, with only one calling it a Sell. The median one-year share price forecast points to a 30% uplift from today’s level. We can dream.

I’m not breaking out the bunting yet. UK retail is still under pressure. National insurance hikes, rising wages and sticky inflation are squeezing spending. And while JD has expanded in the US with its acquisition of Hibbett, trading stateside remains tough.

Would I say investors might consider buying JD Sports? Possibly. But this won’t be a smooth ride. It’s a high-street retail comeback play, a phrase that contains challenges. I’m hopeful though.

The post I’m betting this beaten-down FTSE 100 growth monster is about to go gangbusters! appeared first on The Motley Fool UK.

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Harvey Jones has positions in Diageo Plc and JD Sports Fashion. The Motley Fool UK has recommended Diageo Plc and 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.