Image source: Britvic (copyright Evan Doherty)
June was a relatively good month for FTSE shares, with many putting in a stronger performance than expected. The FTSE 250 edged ahead of the blue-chip FTSE 100 by almost 2%, suggesting investors may be leaning more towards mid-cap domestic stocks.
In my own portfolio, the three stocks that performed best in June were TP ICAP, ITV, and JD Sports Fashion (LSE: JD). Each has delivered decent gains over the past month, and I believe they’re worth a closer look.
TP ICAP
First up is TP ICAP, the world’s largest interdealer broker. The company essentially acts as a middleman, facilitating trades between financial institutions in areas such as commodities, credit and rates. While this is hardly the most glamorous corner of the market, it can be a highly lucrative one. The shares rose 5.69% in June, helped by stable trading volumes and optimism that volatility in rates and energy markets will continue to support business activity.
ITV
Next is ITV, a name many UK investors are familiar with. The media giant, famous for shows from Love Island to Coronation Street, saw its shares climb 5.98% in June. Investors seem encouraged by its ongoing push into streaming and digital advertising, even as the traditional broadcast market continues to face challenges. ITV has also looked to offload non-core assets to strengthen its balance sheet, which could help drive further gains.
JD Sports
But the FTSE share that stands out most to me right now is JD Sports. This is a familiar brand on high streets across the UK and beyond, selling sportswear, athleisure, and outdoor gear. It’s a company that’s had a rough ride — the shares are still down 6.2% year-to-date. However, the past three months has seen a notable recovery, with a 7.34% rise in June alone. This indicates investor confidence is returning.
At its annual general meeting last week, shareholders voted through 22 out of 23 resolutions, signalling broad support for the group’s direction. Meanwhile, Nike’s upbeat results in June gave the retailer another lift, given the close partnership between the two companies.
Valuation-wise, the stock looks compelling. The price-to-earnings (P/E) ratio sits at just 9.48, while the price-to-sales (P/S) ratio is an eye-catching 0.41. Profitability’s showing signs of improvement too, although the net margin’s still modest at 4.28%, but trending higher, and return on equity‘s (ROE) climbed to a respectable 18.22%.
Should investors consider JD Sports?
Of course, there are risks. The balance sheet carries around £3.74bn in debt, which slightly exceeds its equity base. While this isn’t an immediate red flag, I’d prefer to see a lower debt-to-equity ratio to feel more comfortable. If the UK’s current economic recovery stalls, reduced consumer spending could limit profits.
But overall, JD Sports appears to be on the mend. Margins are picking up, management seems to have investor backing, and the shares still look cheap on several valuation measures. If the group can continue to drive down debt and keep improving profitability, it may turn out as a hidden gem for patient investors.
For those willing to take a calculated risk on an undervalued stock, I think it’s worth considering at today’s prices.
