The performance of Bitcoin has continued to be highly volatile during 2019. Since its price is reliant upon investor sentiment as a result of its lack of fundamentals, accurately predicting its long-term prospects can prove to be highly challenging.
By contrast, the growth and value opportunities provided by the FTSE 100 suggest that a number of its members could deliver high returns in the long run. As such, now could be the right time to buy large-cap shares, with these two retailers appearing to be highly attractive at the present time.
JD Sports Fashion
JD Sports Fashion (LSE: JD) appears to be bucking the wider retail trend. It has recorded strong sales growth in recent quarters, with its innovative store layout and online operations appealing to its customer demographic.
The company is making efficiencies through investment in its supply chain. This could lead to a smoother transaction process for customers, with its omnichannel offer continuing to improve.
JD Sports Fashion is gradually diversifying into new markets, such as across Europe and the US, while investing in areas such as gyms. This could lessen its exposure to UK consumers during a period of significant economic and political uncertainty.
Looking ahead, the stock is forecast to post a rise in net profit of 15% in the current year, with further growth of 13% expected next year. Although it trades on a lofty price-to-earnings (P/E) ratio of around 23, its growth prospects suggest that it could record impressive share price gains. As such, now could be the right time to buy a slice of the business as it continues to implement what has thus far proved to be a successful growth strategy.
Another FTSE 100 retail stock that could offer long-term growth is Sainsbury’s (LSE: SBRY). It recently announced a shift in its strategy that will see it close a number of unprofitable stores. This could lift the performance of the wider business, while a cost-cutting drive may help the company to reduce overall debt. Lower leverage could reduce risks during what is a period of uncertainty for supermarkets, with a highly competitive landscape likely to remain in place over the coming years.
Of course, Sainsbury’s currently suffers from weak investor sentiment. Its shares recently reached a 25-year low, and they now have a P/E ratio of just 10.5. This suggests that the stock offers a wide margin of safety, and that investors may have factored-in the risks that it faces.
Furthermore, the retailer’s dividend yield of 5.1% is covered 1.9 times by net profit. This suggests that its total return could be relatively high in the long run, with its growth strategy potentially leading to an improved competitive position compared to its sector peers. This could help it to outperform the wider retail industry over the coming years.
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Peter Stephens 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.
Motley Fool UK 2019