Trade idea of the day JD Sports

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.