3 UK shares I love

As Valentine’s Day approaches, Paul Summers reveals which UK shares he’s particularly fond of and which he won’t want to sell when the time comes.

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As a general rule, it’s not a good idea to fall in love with any investment. It becomes harder to sell when it no longer serves an investor’s financial goals or performs as hoped. But we’re all human, aren’t we? So with this in mind, here are three UK shares I’ve particularly strong feelings for.

Games Workshop

I’ll be the first to admit that I’m far from an expert when it comes to Warhammer 40,000. But I’m confident in saying that its owner — Games Workshop (LSE: GAW) — is one of the finest stocks in the FTSE 250.

The fundamentals speak for themselves. The fantasy figurine maker generates shockingly good operating margins and free cash flow. It also has a wonderfully robust-looking balance sheet with very limited debt.

One snag to all this is that the shares aren’t cheap (22 times forecast earnings), at least at face value. This helps to explain why recent economic headwinds have also led to some significant volatility in the share price.

Still, the recent deal with US mega-cap Amazon to transform its game into a film and television series is a positive development. This could succeed in winning new fans and additional sales. So paying a premium is justified, in my opinion.

Never say never, but I’m struggling to imagine a time when I won’t want to hold this growth stock.

Greggs

Another share from the UK’s mid-tier I’m bonded with is sausage roll seller Greggs (LSE: GRG). To be clear, selling baked treats is hardly technical stuff. So I can’t say the company has the strongest ‘economic moat’ I’ve ever seen.

But the firm’s excellent brand, marketing savvy, strong free cashflow and resilient balance sheet make up for this. Its value offering also gives it a defensive quality as consumers continue to watch their spending.

No, my biggest concern with Greggs is actually how close the company is to reaching saturation point on our high streets, retail parks and travel hubs. As things stand, 2,473 shops were trading at the end of last year.

Then again, recent results suggest this is still some way off. Total sales jumped almost 20% in 2023 to £1.8bn.

This one’s a keeper.

Auto Trader

A final share I love is one I don’t own, at least directly. The firm is online vehicle marketplace Auto Trader (LSE: AUTO).

Like Games Workshop, this company is a market leader in what it does. To even think about buying a car before checking its site — with 437,000 vehicles listed on average a month — seems nonsensical if I’m to get a great deal.

Similar to the other businesses mentioned here, one drawback with this stock is that it nearly always trades at a premium to the rest of the market. Supporting this, a P/E of 26 for the current financial year suggests quite a bit of earnings growth is already priced in. The cost-of-living crisis has also led to a softening of car sales in the last year.

If I were to buy here it would be in response to a general market meltdown. I’m happy to be invested via the Keith Ashworth-Lord-managed CFP SDL Free Spirit fund in the meantime.

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.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers owns shares in Games Workshop Group Plc, Greggs Plc and CFP SDL Free Spirit. The Motley Fool UK has recommended Amazon, Auto Trader Group Plc, and 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.

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