Kalkine: Could These FTSE 100 (LON) Names Outpace the Index Through 2035?

Highlights

• Defence firm BAE Systems (LSE:BA) has shown consistent growth in revenue and order backlog, driven by expanding geopolitical demands.

• Retail chain JD Sports Fashion (LSE:JD) continues to expand globally, with a focus on sportswear and athleisure markets.

• Both companies are components of the FTSE 100 index, which has averaged moderate annual returns over the past decade.

Operating in the defence and aerospace sector, BAE (LSE:BA) Systems has built a prominent position as a key contractor for NATO countries. As part of the FTSE 100, the firm has delivered considerable shareholder value through consistent increases in both its share price and distributions.

The rise in geopolitical tensions across Eastern Europe, the Middle East, and the Indo-Pacific has created strong demand for defence-related services and technology. BAE’s work spans land, air, sea, and cyber domains, allowing it to cater to a wide variety of military and government clients.

A substantial surge in Western defence budgets over the past few years, especially following heightened security concerns, has translated into a significant expansion of BAE’s order backlog. Reports indicate that the firm has secured contracts that place its backlog at record highs, underscoring the scale of demand it currently services.

While broader fiscal concerns could influence defence expenditure globally, regional spending in Europe and among NATO allies appears to be on a robust growth track. An upcoming summit is anticipated to further entrench defence commitments, supporting the long-term operational landscape for contractors like BAE Systems.

Retail Sector: JD Sports Fashion (LSE:JD) – Part of FTSE 100 Index

JD Sports Fashion (LSE:JD) operates within the consumer discretionary segment, specifically focusing on athletic and casual fashion retail. As a constituent of the FTSE 100 index, JD has emerged as a notable name in the expanding global sportswear and athleisure market.

The company’s strategy of acquiring complementary retail chains across Europe, North America, and Asia has helped strengthen its global footprint. This international expansion continues to play a crucial role in enhancing its distribution network and customer base.

JD Sports has made strides in digital transformation, using online platforms to augment in-store experiences and boost customer engagement. Its emphasis on exclusive brand partnerships and private-label offerings contributes to margin enhancement and customer retention.

Despite evolving macroeconomic pressures and shifting consumer behaviours, the brand remains positioned in a resilient retail niche. The continued fusion of sportswear and fashion in daily wear trends creates an enduring demand base for JD’s offerings, bolstered by effective brand placement and omnichannel presence.

Product Diversification and Geographic Expansion

Both companies share a strategic focus on expanding their reach and diversifying their offerings. BAE’s growth into advanced technology segments, including cyber and electronic warfare, mirrors JD’s efforts to build multi-channel retail capabilities.

The pursuit of geographic expansion by both firms provides additional avenues for revenue stability, especially in changing global conditions. In BAE’s case, long-term government contracts and international defence collaborations provide predictable streams of income. JD, on the other hand, capitalises on growing demand in emerging markets for branded sportswear.

Sectoral Momentum Aligned with Broader Trends

The broader macroeconomic themes surrounding national security and lifestyle transformation underpin the strength of both companies. With ongoing transformation in both the defence and retail sectors, these FTSE 100 constituents remain actively aligned with prevailing structural trends.

Inclusion in the FTSE 100 index reflects the scale and influence of each business in its respective sector, which continues to evolve in response to shifting global circumstances and market dynamics.