I’m always on the lookout for cheap shares to add to my portfolio of stocks, as I can’t resist a bargain. I prefer buying top companies when they’ve fallen out of favour, as this typically means a lower entry price and higher yield. Betting against the market takes patience and strong nerves though.
Troubled companies can take years to turn around. When I asked artificial intelligence chatbot ChatGPT to name three FTSE shares with low valuations but high recovery prospects, I was pleased to find I already hold two of them. Not that I treat ChatGPT as infallible – far from it.
Still, I couldn’t fault the chatbot’s logic: JD Sports Fashion’s been a losing bet so far Unfortunately, its first pick, ( ), has yet to prove the point. The trainer and sportswear retailer has had a 12 months, with the shares down 28% after repeated profit warnings. Over three years, they’re down 57%.
I’ve been averaging down, tempted by its strong UK presence and expanding international operations, particularly in the US. As ChatGPT notes: JD Sports also looks great value, trading at just 6.8 times earnings.
Yet it operates in a tough retail environment that demands constant investment in marketing and innovation. Fashion’s vulnerable to changing trends. Has athleisurewear finally had its day? I think not.
I’m backing JD Sports to recover as interest rates fall and the economy improves, even though the shares continue to head south. Retail’s a challenging sector, so it’s no su.