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The stock market is currently flooded with growth stocks that took a beating last year. I believe now is a good time to try and dig out the misplaced gems in the carnage. one FTSE 250 The company stands out for me, and its shares are at the top of my buy list this month.
A cheap gem
Games Workshop (LSE:GAW) continues to grow healthy as a business, but the share price has still taken a haircut this year. In the year By 2022, the shares were down 30 percent.
However, the creator of fantasy worlds and images is consistently profitable, meaning the stock actually has a decent price-to-earnings (P/E) ratio. That ratio is currently 18. I see this as a very reasonable price to pay for a company that is still growing.
A successful strategy
“Our ambition remains clear: to make the best virtual miniatures in the world, to engage and inspire our customers, and to profitably sell our products worldwide. We intend to do this forever. Our decisions are focused on long-term success, not short-term gain.“
This is from the company’s annual report. As a long-term investor, these words are music to my ears. Games Workshop is a true leader in what it does. Her customers are busy and loyal. It’s a profitable global business (and pays a nice 3.6% dividend too!). And it is a very long time in the strategy.
This strategy has worked surprisingly well, it must be said. Operating profit increased 10 times in five years! Despite the recent market drag, the shares are up 300% over the same period.
Mini-Disney
“We intend to do this forever.He said. I don’t see this as exaggeration from management. of Owner Warhammer A franchise creates stories and characters that resonate strongly with its loyal customers. In that respect, it reminds me of the Marvel Universe it owns. Disney. I see both as franchises of sorts.
Like Disney, Game Workshop successfully monetizes its fan base with an endless variety of books, video games, merchandise, and a subscription television channel. The company co-publishes comic books with Marvel. And all this – like each individual symbolic character – is reinforced by a strong intellectual property (IP).
Global expansion with risk
In the year From a humble first store in London in 1978, the company today has 5,000 stores and a digital platform in dozens of countries. One region with serious growth potential is Asia, where Warhammer enjoys a small but growing cult following.
Which brings me to one danger I see, which is fake image copies. Those plastic Warhammer figurines aren’t cheap and this has created a market for illegal “re-casts”, especially in China. This could affect the company’s future price increases.
Fortunately, there is a strong ban on players using fake models in China. It’s cheating and violates the spirit of the game (as well as Games Workshop’s IP).
I wouldn’t be surprised to see Games Workshop move in. FTSE 100 one day. When that happens, I still intend to own the stock.