I’m constantly looking to boost my holdings with the best stocks to buy that will provide me consistent returns. One stock that could fit the bill is Games Workshop (LSE: GAW).
Warhammer creator
Games Workshop is a UK-based hobby miniatures business with an international presence. It now generates more than 70% of its revenue from outside of the UK, from markets such as the US and Japan.
As I write, Games Workshop shares are trading for 10,500p. At this time last year, they were trading for 6,425p, which is a mammoth 63% rise over a 12-month period. This is during the same period of time when many stocks have struggled due to macroeconomic issues.
Success, growth potential, and risks to consider
Games Workshop is now the biggest business of its kind in the world and has a mammoth loyal following for its ever-popular product line. In addition to its flagship Warhammer series, it has agreements to manufacture and sell The Lord of The Rings miniatures as well as recently striking a deal with Amazon too. Things are looking good, in my opinion.
Games Workshop has an excellent track record of performance, as do many of the other candidates on my stocks to buy list. It has managed to grow revenue and profit for the past four years. Returns continue to increase too. However, I do understand the past is never a guarantee of the future.
Moving on to returns, Games Workshop’s dividend yield stands at an enticing 5%. This is higher than the FTSE 250 average of close to 2%. Although I understand that dividends are never guaranteed, I’m buoyed by its approach. Games Workshop said it is only using “truly surplus cash” to reward investors in its most recent trading update.
I do understand that all of the potential best stocks to buy come with risks. One of the biggest issues right now is soaring inflation. To date, it seems Games Workshop has managed to pass on increased costs to its loyal customer base. If high inflation persists, this may not be the case, so I’ll keep a close eye on trading updates and developments here.
Another issue is that Games Workshop shares are trading at a premium on a price-to-earnings ratio of 26. Any poor performance, or any issues with its licensing agreements could send the shares downwards. The old saying “you get what you pay for” is in my head right now. Quality businesses cost premium prices.
One of the best stocks to buy for growth and returns
I think Games Workshop’s rise is one of the best stories of the stock market in recent memory. Starting from humble beginnings and becoming a £3.6bn market cap business with a worldwide presence and some exceptional products with huge fan following is no easy feat.
I’m a fan, if you can’t tell already, and the next time I have some spare cash, I’ll be adding Games Workshop shares to my holdings. I do believe it is one of the best stocks to buy for passive income. Recent and historic performances look good and it has a solid balance sheet too. More tellingly for me, its own intellectual property, the Warhammer series, has been a smash hit and from what I know about gaming, there is lots of growth potential ahead with spin offs, new stories to tell, and much more.
The post With a 5% yield, is this one of the best stocks to buy for juicy returns? appeared first on The Motley Fool UK.
Should you buy Games Workshop shares today?
Before you decide, please take a moment to review this first.
Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.
It’s called ‘5 Stocks for Trying to Build Wealth After 50’.
And it’s yours, free.
Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.
And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.
That’s why now could be an ideal time to secure this valuable investment research.
Mark’s ‘Foolish’ analysts have scoured the markets low and high.
This special report reveals 5 of his favourite long-term ‘Buys’.
Please, don’t make any big decisions before seeing them.
Claim your free copy now
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()
More reading
3 stocks I’m considering buying for a second income!
Should I be rushing to buy these 2 FTSE 250 stocks?
Up 62% in 1 year! Why is the Games Workshop share price on fire?
The Games Workshop dividend strikes again! Buying time?
2 UK growth stocks I’d buy over Nvidia
Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Games Workshop Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
