A multibagging growth stock I’d sell today, and one I’d buy

When a stock has already multibagged, it can be hard knowing whether to buy or sell.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Things have been going pretty well for KAZ Minerals (LSE: KAZ) shareholders of late. Following the prolonged share-price slump that started in 2010, there’s been an impressive recovery — and at today’s 820p level, we’re looking at a 10-bagger since the lows of late 2015.

A recovery in the price of copper has been a big help, with the metal putting on around 50% over the past 12 months, and the ongoing ramping up of production volumes at KAZ has strengthened the surge. 

That production rise is set to continue after the company told us it has received approval for a $1.2bn expansion at its Aktogay copper mine in Kazakhstan. The project will double Aktogay’s sulphide ore processing capacity starting in 2021, from 25m tonnes per year to 50m. Current output of copper from sulphide ore should rise by 80 kt to around 170 kt.

Heavy debt

When I last looked at KAZ Minerals in July, I liked what I saw, especially the low P/E and PEG growth characteristics. But since then, the share price has put on nearly 30%, and I’m starting to wonder if the current bull run might be running out of steam.

I’ve also been looking more closely at the debt situation, and I’m actually a bit more concerned now than I was then. Although the debt figure has been cut to $2.2bn since a 2016 year-end level of $2.7bn, that’s actually still a pretty big multiple of pre-tax profit — about 4.8 times this year’s forecast figure.

I still like the long-term outlook, but I think I see better bargains elsewhere now, and if I owned these shares I think I’d be looking to cut my holding and take some profit.

Cash cow

A multi-bagger that I’d consider transferring my money to is Games Workshop Group (LSE: GAW) whose shares have almost quadrupled in value over the past 12 months, to 2,515p. 

Back in October I was bullish about what still seemed like a modest P/E rating, and the company’s subsequent trading updates have kept me on board. After telling us in October that sales were continuing strongly, December’s update revealed estimated sales of around £109m for the first six months of the current year, generating an operating profit of about £38m. 

It’s early days yet, but with sales and profits growing “in all channels in constant currency terms“, the board reckons things are going in line with full-year expectations.

That suggests we could be seeing an 80% hike in earnings per share. Even after the share price rises, that would still leave the P/E multiple at around 15.5, and I don’t see that as too stretching at all.


The big attraction for me is dividend income, and it’s unusual for a company going through such a strong growth phase to also be distributing much in the way of cash. But Games Workshop’s forecast full-year dividend yield stands at around 5%.

Admittedly, cover is looking modest at around 1.3 times — and there is a small fall in EPS pencilled in for 2019, which could put the dividend under a little pressure.

But even if earnings growth is set to slow (which it inevitably will at some stage), as a mature post-growth dividend payer, I’d still see this as a tempting investment.

At this stage, I’d buy for the dividends and take any future growth as a bonus.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Young black woman using a mobile phone in a transport facility
Investing Articles

After soaring 35% this year, is there still value in Barclays shares? Here’s what the charts say!

Barclays has been on a tear in 2024. But where does that leave investors considering buying some shares now? This…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

Nvidia stock has surged 3,450%. This UK investment trust owns loads!

Nvidia's recent amazing price surge has helped boost the value of this investment trust too as the chipmaker is its…

Read more »

Bronze bull and bear figurines
Investing Articles

After the general election what might happen to the FTSE 100?

Our writer’s been looking at the manifestos of the three main political parties to try and understand how the general…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

When will Shein hit the UK stock market and should I invest?

With Shein looking likely to list on the London stock market in 2024, this writer weighs up the case for…

Read more »

Investing Articles

Start supercharging passive income with REITs!

Are REITs the ultimate investment for boosting income generated from a portfolio? Zaven Boyrazian explores some of the most lucrative…

Read more »

Investing Articles

Should I buy more Rolls-Royce shares near 500p?

This investor is wondering whether to buy more Rolls-Royce shares this summer or to just stick with those he already…

Read more »

Investing Articles

After its big fall, is the National Grid share price dirt cheap now?

The National Grid share price fell sharply in reponse to new rights issue plans. But is it an even better…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Starting in June, I’d invest £1,000 a month to aim for a £102,000 second income in retirement

This author highlights a less well-known FTSE 100 stock that could help his portfolio generate a very big second income…

Read more »