JD Sports Fashion (LSE:JD) learned earlier than anyone else to communicate with the young consumers switched on to trends. London Stock Exchange Group (LSE:LSEG) has become a global financial markets infrastructure leader and continues to be so.
I view these British stocks as the stock market buys of the decade after returns of 2,712% and 1,046%, eclipsing the performance of the FTSE 100 (92%). I will never sell them, and here’s why.
Consistently brilliant stocks
JD Sports is a cultural phenomenon. As urban culture has grown in the UK, so has JD Sports’ ubiquity across cutting-edge streetwear and sports fashion. This favoured position in the market has helped drive JD’s underlying profits from £67.4m to £355.2m within a decade.
Similarly, the London Stock Exchange Group is one of the more established names in the FTSE 100. The company is expert at keeping itself relevant to corporate demands. Timely stakes in clearing house LCH.Clearnet and interest rate swap business TradeWeb have helped to future-proof its offer.
Underlying drivers of future growth
JD Sport’s strong record of cash generation means it should be well-placed to fund further expansion opportunities. However, this may be at be at the expense of dividend growth. Rather encouragingly, it has bolstered its balance sheet and retained more cash since the pandemic.
The downside for me is that the the higher cost of living is likely to negatively impact JD Sport’s sales. But on the plus side, it is a cyclical stock that can outperform the wider market when things are going well.
Switching back to the the London Stock Exchange Group, the shares continue to perform well even after a decade of astronomical growth. The stock’s value is in positive territory this year — up 15% in a year when FTSE 100 valuations have broadly declined. The FTSE 100, for example, is down 3%.
The share price performance this year vindicates my belief the stock represents a downside hedge for market turmoil. The Group benefits from market volatility. Elevated trading volumes contribute to the exchange’s income. Positively, annual earnings have been forecast to grow in the double digits.
However, I do foresee clear headwinds regarding the Group’s growth potential over the long run. A weak pound, Brexit, and a dwindling IPO pipeline are all threats.
Nevertheless, I believe the long-term trends the company is well-primed to benefit from, such as increasing wealth and the increasing number of investors, far outweigh any short-term hurdles.
Same approach, different decade
I am a relatively young investor, so capital growth is my main priority. I will never sell these stocks because they remain at the forefront of long-term trends. This favourable position has seen both companies provide astronomical returns over the past decade.
Is this enough for me to expect another decade of sizeable capital growth from them? It is impossible to tell.
Yet, despite clear headwinds for both stocks, I consider them to be sturdy British heritage stocks with solid fundamentals. I intend to hold on to the shares. The long-term opportunities for both stocks simply outweigh any of the risks I anticipate.
