( ) shares have fallen around 50% from their highs. And currently, they’re trading at a huge discount to the market. Could the athletic and leisure sportswear retailer be one of the UK’s best value stocks right now? Let’s have a look.
Value investing can be tricky Value investing is easy in theory. It simply involves buying a cheap stock and then waiting until its valuation rises. In reality however, this style of investing can be tricky.
For a start, cheap stocks are often cheap for a reason. If a stock’s trading at a low valuation, it’s usually because there’s some fundamental problem other investors have spotted. Secondly, cheap stocks can get cheaper.
Just because a stock’s down 50% doesn’t mean it can’t lose another 50%. I’ve learnt this the hard way. A cheap stock At present, JD Sports Fashion shares trade on a forward-looking (P/E) ratio of just eight.
That’s a very low valuation. Especially for a company that’s grown its revenues by around 120% over the last five years. For reference, the average P/E ratio across the UK market is about 14.
But going back to what I said before, we need to closely look at the risks here. Is there some fundamental issue that could hit revenues and/or earnings and send the share price lower? Looking under the bonnet Well, one issue that stands out to me is that products seem to have lost their shine recently (I’d know because I’m a Nike shareholder and the stock’s been absolutely crushed). At the moment, it s.
