Trade idea of the day: JD Sports to 393p in the near term?

JD Sports is proving to be a rare ray of light in a very challenging environment, bucking the trend of falling retailers. Whilst UK retailers have experienced a very difficult winter, JD Sport has dodged UK high street gloom, overtaking Sports Direct as the UK’s leading sports retailer by market value.

What: 

JD Sports is proving to be a rare ray of light in a very challenging environment, bucking the trend of falling retailers. 

Whilst UK retailers have experienced a very difficult winter, JD Sport has dodged UK high street gloom, overtaking Sports Direct as the UK’s leading sports retailer by market value.

The sports fashion retailer reported a jump in profits of 24% to a record £294.5 million with in store like for like in store sales rising 3%, whilst online sales jumped 30%. 

International expansion has boosted the firm at a time when the domestic market is particularly tough and faces saturation. JD Sports has opened 56 stores across Europe and 9 further afield in the likes of Australia and South Korea. 

The focus on international expansion has paid off, with JD avoiding the fate faced by many UK retailers of disappointing sales as the UK consumer reined in spending following the post Brexit referendum squeeze.

Whilst the figures are impressive the outlook for JD is also encouraging following the purchase of US sneaker store Finish Line for around $400. 

The deal is yet to close but will present JD will a solid opportunity to get a strong foothold in the US, expanding into a huge potential market.

How: 

JD is currently trading 6% higher on the day at 375p, still considerably below its 52-week high of 461p. 

A meaningful break through its current level could see the price target resistance seen at 386p before opening the door to 393p. 

On the downside near term support can be seen at 340p. JD is trading above 50, 100 and 200 day moving averages with technical indicators also pointing to a strong buy. Average broker consensus estimates longer term sit at 479p, a 27% increase from its current price.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.