This week I purchased some extra shares in a FTSE 100 firm that already options closely in my portfolio. In truth, though I all the time need to maintain my portfolio diversified, I made a decision that topping up my holding on this firm when the share price regarded notably low cost might doubtlessly show to be a profitable transfer.

The FTSE 100 share in query is JD Sports activities (LSE: JD).

Why am I so enthusiastic about it? Legendary investor Warren Buffett talks about shopping for into nice firms at engaging costs. In my view, JD Sports activities at present ticks each these packing containers.

A confirmed, cash-generative, rising enterprise

To start out, think about the enterprise. JD’s focus is on promoting garments, footwear and different athletic items. That may be a giant market and one that’s more likely to endure. The client base additionally appears to be pleased to shell out on pricy items even when the economic system is weak, one thing I see as a bonus though I do nonetheless concern {that a} deep sufficient financial downturn might damage gross sales.

JD Sports activities has constructed economies of scale and in addition has a considerable worldwide attain. It has constructed a sizeable digital presence however not on the expense of abandoning bricks and mortar. In truth, it has been opening tons of of shops lately and this month opened its largest one but, at Manchester’s Trafford Centre.

With a robust model, common particular merchandise distinctive to JD, loyal buyer base and ongoing development plans, I reckon that is an impressive enterprise.

The share appears to be like low cost

However the highway has had some bumps. Final 12 months, JD sports activities issued revenue warnings and it has reined in its aggressive retailer opening programme.

A key provider Nike has had a tough few years and ongoing weak point within the model’s gross sales is a threat for JD Sports activities too given how large a proportion of its gross sales are of Nike merchandise.

However does that justify a share price in pennies? The FTSE 100 firm has no debt (excluding lease liabilities) and a market capitalisation of £4.2bn. But final 12 months’s revenue earlier than tax and adjusting gadgets got here in at £0.9bn. To me, that makes the present share price in pennies look unreasonably low cost.

In a tricky market with unsure dangers like tariffs and unpredictable worldwide transport charges, the FTSE 100 firm’s income this 12 months and in subsequent years might not match final 12 months’s efficiency.

Nonetheless, I stay upbeat concerning the long-term story right here. JD’s funding in development over latest years is paying rewards already so far as I’m involved.

The following couple of years will see main sporting occasions that might assist enhance buyer demand. The corporate has a confirmed mannequin that’s extremely cash-generative and will assist help additional development with out the corporate needing to tackle debt to fund it.

So far as I’m involved, the present JD Sports activities share price is a discount. I acted on it as a result of I didn’t need to miss what I see as a superb alternative.