JD Wetherspoon: a growth stock with record sales and a long-term competitive advantage

The JD Wetherspoon (LSE:JDW) share price has seen a 47% drop over the past five years. Despite this, the company has shown strong growth in its underlying business, making it an interesting stock for investors to consider.

In its most recent trading update, JD Wetherspoon announced record total sales, highlighting its long-term competitive advantage and making it an appealing investment opportunity.

The company focuses on reinvesting its cash into business growth rather than paying dividends to shareholders. Recent evidence shows that this strategy is paying off, with a 5.5% growth in like-for-like sales and record total revenues. This growth has been achieved even as the company has reduced its number of pubs, leading to lower costs, wider margins, and improved profitability.

JD Wetherspoon also benefits from a competitive advantage in the form of lower costs compared to its industry peers. This advantage stems from its scale, allowing it to buy in volume, and the ownership of the majority of its pubs, reducing lease payments over the long term.

While competitive risks are not a major concern for the company, potential risks from inflation could impact its low-cost approach. Although inflation in the UK has been low recently, the possibility of it rising in the future poses a risk to JD Wetherspoon’s business strategy.

Despite these risks, the company’s attractive share price, impressive growth, and long-term competitive advantage make it a compelling investment opportunity. The author of the article owns JD Wetherspoon shares and plans to continue adding to their investment in the company.