I’m always looking for the best stocks to buy for my holdings. Bloomsbury Publishing (LSE: BMY) could be one such stock. Here’s why.
Harry Potter publisher
Bloomsbury Publishing is one of the best-known publishing houses in the world, with roots stretching back to 1986. It is the originating publisher and custodian of the world-famous Harry Potter series. Many of its authors have won Nobel, Pulitzer, and Booker prizes.
So what’s happening with Bloomsbury shares currently? As I write, they are trading for 410p. At this time last year, they were trading for 419p, which is a 2% drop over a 12-month period.
What I’m looking for in my best stocks to buy
I’ll start with the valuation of a stock. The shares look decent value for money to me right now on a price-to-earnings ratio of 15. Although a cheaper valuation could indicate a bargain buy, I’m happy to buy a good business at a fair price.
Next, I want to understand Bloomsbury’s position in its respective market as well as future prospects. I see both of these aspects are positive. Being a custodian of the Harry Potter series has helped propel Bloomsbury to new heights. In addition to this, it also has many other facets to its diverse offering, including its digital content arm and education publishing too.
Looking forward, many of Bloomsbury’s works are being adapted for television, including a Harry Potter television series and Netflix-produced show based on the hit book, The Three-Body Problem. The future looks bright for Bloomsbury with these new revenue streams, in my opinion.
Moving on, I want to understand how Bloomsbury has performed recently and historically. Although I understand that past performance is not a guarantee of the future, it allows me to build a picture of how stable a business is and where it could be headed. I can see that Bloomsbury has grown revenue and profit for the past four years.
Finally, I would like my best stocks to buy to provide me with a passive income stream through dividends. Bloomsbury ticks this box too with a dividend yield of 2.9%. However, I do understand that dividends are never guaranteed.
Risks and what I’m doing now
There are two key issues I’d keep an eye on for Bloomsbury. Firstly, its bread and butter, what it is best known for, is books. Rising costs of raw materials, including paper, could eat into profit margins and underpin returns. There is also competition from alternative media such as streaming and gaming. Reading is not everyone’s cup of tea and other media types mentioned are growing in popularity as well as capability, backed by evolving tech including artificial intelligence.
To conclude, there is lots to like about Bloomsbury for me and I rate the stock highly, hence why it is one of the best stocks to buy for my holdings currently. I plan on adding some shares when I next have some spare cash.