I believe Games Workshop (LSE:GAW) is one of the best shares I could buy for my portfolio now. The FTSE 250-listed stock has experienced excellent share price and performance growth in the past five years.
FTSE 250 opportunity growing fast
Games Workshop is setting the gaming world alight. The company is a British manufacturer of miniature figurines, war games, and fantasy figures. Its best-known product is its Warhammer range, which has skyrocketed in popularity.
As I write this, shares in Games Workshop are trading for 10,800p. Five years ago, GAW was priced at 478p per share. At current prices, that’s a 2000% increase! This time last year, it was trading at 5,970p per share which means it is 80% higher today. Its share price has grown close to 85% annually for the past five years. I would struggle to find many other FTSE stocks that can claim a similar rise.
Performance and dividends
Two recent updates (one in January and one last month) from Games Workshop further cemented its place on my best shares to buy now list. Its recent announcement confirmed Q3 trading was in line with expectations. More importantly for me, it declared a dividend of 45p per share. This is in line with its policy of distributing surplus cash.
In January’s half-year report, not only did it announce record sales, profits, and cash generation, it also declared a dividend too. That time, it was 80p per share. Many firms across the FTSE have cut dividends since the market crash last year in order to conserve cash. The fact GAW can still payout dividends to its investors shows that business must be thriving.
Back to Games Workshop’s half-year report in January, it announced that its record performance stemmed from expansion strategies. North America was specifically mentioned as a fruitful location for its recent performance. Despite retail stores being closed for a significant amount of time due to Covid-19, online sales offset these losses. Sales rose by 26% and pre-tax profit rose by 6% compared to the same period last year.
Best shares to buy now have rewards but come with risk
Despite the fact I really like Games Workshop, it has its risks and challenges just like any FTSE stock. One of its main challenges is that of copyrighting issues and plagiarism. 3D printing of its premium figurines is on the rise. This could affect sales figures. Piracy is a huge issue in the gaming world. In addition to this, the Covid-19 pandemic is not over, and further lockdowns and restrictions may still affect its sales and profit.
I still class Games Workshop as one of my best shares to buy now. It currently trades on 30 times 2020-21 forecast earnings so it could be classed a tad expensive. Despite that, I think it has a solid business model, it obviously has the product range and demand as it is bucking the trend and thriving in the pandemic as reported in recent trading updates. I expect next month’s full-year update to be even better.
Games Workshop’s place on my FTSE list of best shares to buy now also stems from its unbelievable rise, appetite to grow and expand, and the fact it is still able to pay dividends. I would invest today. Here is another good opportunity I believe could boost my portfolio.
Jabran Khan has no position in any shares mentioned. The Motley Fool UK owns shares of Games Workshop. 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.