This UK stock soared 156% in 5 years. Can it keep going?

As a long-term investor with a buy-and-hold approach, I like to find stocks that offer great potential for strong performance over the years.

One UK stock has risen 15% in the past 12 months – and 156% in five years. Not only that, but I think there might be a better performance to come. I have bought shares this year.

Simple but powerful

The share in question is the retailer JD Sports (LSE: JD).

At first glance, the sports and athletic shoe trade may not seem like an obvious goldmine. But JD has proven that it can.

Many customers want sports and casual clothes. Some buy online, but stores remain important. JD has built successful online and offline operations that benefit from an aspirational brand as well as proven retail know-how.

Margins can be attractive in the industry; at 5.4%, JD’s net profit last year was higher than supermarkets, although it was still below clothing retailers such as Next. With a global footprint, JD already has a lot of scale. Last year’s revenue came in at £8.5bn.

Ambitious growth plans

However, the company is certainly not resting on its laurels.

It has set a growth strategy and key objectives for the coming five years. Whether it can lead to a 156% increase in the share price like in the last five years remains to be seen. But it’s clear that JD has big ambitions.

The plan expects double revenue growth in percentage terms, double operating margin (8.4% last year) and annual capital expenditure of £500m-£600m, part of which will help finance 250-350 new store openings per year. . The company is targeting £1bn of cash generation each year from operating activities.

UK stock promise

I think that sets the stage for potential blockbuster growth in business.

Now this British stock trades at a price-to-earnings ratio of 13. If the growth plan delivers, I have lots of room to grow.

That is why I have bought JD Sports shares this year. I am not alone. This month, the director’s spouse bought 40,000 shares and the non-executive director bought more than 27,000 shares. Both purchases were at a higher price than the JD that changed hands at the start of today’s trading session.

Weigh the risks and rewards

But, as any athlete knows, life can hold its share of disappointments. JD has ambitious growth plans – but it could be different. Adding hundreds of new stores means high capital expenditure, which can be profitable. A weak economy may see some customers shun good trainers in favor of cheaper footwear.

Will JD break the barriers? A change in management last year made the City nervous that the company may not maintain the historical growth rate, but until now the new leadership looks for the job. If I had any spare cash to invest in the UK stock market right now, I’d be happy to buy more JD Sports shares.