FTSE 250 incumbent Games Workshop (LSE:GAW) has experienced a meteoric rise in recent years. Is it one of the best growth stocks currently out there and should I buy shares for my portfolio? Let’s take a look.
FTSE 250 star
Games Workshop has set the gaming world alight in recent years. It is a British manufacturer of miniature figurines, war games, and fantasy figures. When people use the term “gaming stock” it usually refers to video games on digital platforms. Games Workshop bucks that trend. It has a massive fan following and sells its products worldwide.
The rise of Games Workshop and its current lofty position in its respective market makes me wonder if there are any better growth stock options out there. Its rise and growth story as well as its ability to navigate economic uncertainty stand out to me.
Games Workshop’s physical stores were closed when the pandemic struck and this did affect its share price but not its performance. As I write shares are trading for 11,570p per share. This time last year, shares were trading for 9,025p per share. When the market crashed last year, its share price dropped by over 40% down to 3,970p per share. Since its market crash low, the Games Workshop share price has increased a huge 191%.
Growth stocks perform well consistently
Games Workshop has performed consistently for some time now. As I mentioned earlier, even in the face of economic uncertainty, it has managed to maintain its momentum. It released its annual report at the end of July for the year ending 30 May 2021.
The financial breakdown made for excellent reading. Games Workshop confirmed in the report that revenue, operating profit, net cash, earnings per share, and dividends all increased compared to last year. In addition, it reported good progress in expanding its reach globally in previously untapped markets.
When I think of the trading period in question for this annual report, it clearly shows me that Games Workshop flourished during the pandemic. I cannot think of too many other growth stocks that can attest to this type of performance.
Furthermore, Games Workshop has a good track record of performance. I understand historic performance is not a guarantee of the future. I use it as a gauge personally. Revenue and profit have continued to increase year-on-year for the past four years, as has net cash.
Risk and reward
All growth stocks have risks, however. Firstly, Games Workshop is trading at all-time highs. It has a price-to-earnings ratio of 31, which is not the cheapest. Any negative news or market issues could cause the share price to fall.
Linked to this is the fact Games Workshop experienced burgeoning demand when restrictions were in place. With the economy reopening and pent-up demand for other leisure activities and holidays, there is a concern sales levels could plateau somewhat.
Overall I do believe Games Workshop is a great FTSE 250 growth stock opportunity. It could be my best growth pick out there. I would happily add shares for my portfolio right now. It has a good track record with good financials and further growth aspirations, which interests me greatly. It also pays a dividend which helps me make a passive income. There is a lot for me to like about Games Workshop.
The post Is this FTSE 250 pick the best growth stock out there? appeared first on The Motley Fool UK.
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Jabran Khan has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended 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.