Prediction: this will be the FTSE 100’s next great stock!

This FTSE 250 stock has more than doubled in value during the past five years. Our writer thinks it could become one of the FTSE 100’s hottest stocks.

| More on:
Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.

Image source: Getty Images

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.

The FTSE 100 is home to a wide variety of different stocks. However, it is especially famous for certain industries like financial services, energy, mining, and fast-moving consumer goods.

Mega caps like Shell, Lloyds, Glencore, and Unilever are some of its most notable sons. It’s incredible to think that a niche hobby stock could be adding its name to this hallowed list, but that’s what we are looking at today.

Games Workshop Group’s (LSE:GAW) share price has risen a stunning 133% in value over the past five years. If it continues its current path, the fantasy wargaming giant might soon be banging on the door of the Footsie.

The chances of this happening are super high, in my opinion. Here is why.

A brilliant enigma

Games Workshop’s share price performance since 2019

Games Workshop's share price performance.
Source: London Stock Exchange

It’s been 46 years since Games Workshop opened its first shop in Hammersmith, London. But to many, the products it churns out — and what makes them so popular with hobbyists — remain a mystery.

It’s easy to understand what British American Tobacco, Diageo and Barclays all do and what makes them investable companies. And that’s what makes them so popular.

Tabletop wargaming, by comparison, is a more opaque sector and trickier to understand. So let me give you a potted history of what Games Workshop does, and what makes it an industry powerhouse.

Booming industry

The FTSE 250 company designs, manufactures, and then sells — through its own shops and websites, and via third-party vendors — a huge range of plastic miniatures and gaming systems. Its miniatures represent various armies, factions, and characters from their fictional universes.

Hobbyists buy these models in boxed kit form, then build and decorate them (often using Games Workshop’s vast collections of paints, brushes and crafting tools). Once finished, players then do battle with their miniatures on a tabletop with others using a turn-based playing system incorporating dice.

Games Workshop UK Stock
Source: Games Workshop

It’s a unique hobby, sure, and certainly not to everyone’s tastes. But it’s a gigantic one that has a passionate following. And it’s still growing steadily in popularity.

According to researchers at USD Analystics, this industry is set to expand 6.3% between 2024 and 2030.

A top stock to consider

Hobbyists have a variety of tabletop games systems to choose from. And the number of game manufacturers entering the market is growing, representing a threat to Games Workshop.

But the Nottingham company has built a formidable fanbase in its own right. This is thanks to the high quality of its product and storyline development around its miniature armies and characters.

Its flagship Warhammer 40,000 games universe, for instance, has evolved over decades and spawned vast communities of players in that time.

The business is busy bringing its products to new generations of devoted followers, too. It is steadily expanding its global store network. And it is in talks with Amazon to bring its Warhammer universes to the big and small screens to boost model sales and generate huge revenues in its own right.

Today Games Workshop shares trade on a forward price-to-earnings (P/E) ratio of 21.3 times. Given its position as a top growth stock I think this valuation is pretty reasonable.

I believe it’s a top stock to buy today and hold onto for the long term.

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. Royston Wild has positions in Diageo Plc and Games Workshop Group Plc. The Motley Fool UK has recommended Amazon, Barclays Plc, British American Tobacco P.l.c., Diageo Plc, Games Workshop Group Plc, Lloyds Banking Group Plc, and Unilever 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.

More on Investing Articles

Investing Articles

1 superb growth stock that could be a massive winner, with help from AI

Our writer looks at one high-quality growth stock that might benefit tremendously over time from advances in artificial intelligence.

Read more »

2024 year number handwritten on a sandy beach at sunrise
Investing Articles

2 ultra-high-yield UK stocks paying me passive income

This writer highlights two high-quality FTSE 100 dividend stocks offering very lucrative passive income opportunities right now.

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

Should I increase my stake in Legal & General or buy great value Aviva shares instead?

Aviva shares have had a strong year, which is bad news for Harvey Jones who bought FTSE 100 rival Legal…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

If I’d bought Lloyds shares a year ago, here’s what I’d have now

It looks like the value of my long-held Lloyds shares is moving me into profit in 2024. Are the UK's…

Read more »

Investing Articles

Here’s how I’d target a £5,900 second income by investing £50 a week

We don't need a huge pile of cash to earn a second income. Here's one way I'd aim for it…

Read more »

Grey cat peeking out from inside a cardboard box in a house
Investing Articles

Recently released: May’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’m listening to Warren Buffett and buying bargain shares!

Our writer has been taking lessons from the investing career of Warren Buffett. Here's how he's using it to try…

Read more »

Close-up of British bank notes
Investing Articles

Here’s how I’d spend £6,900 on income shares to try and earn £500 per year

Christopher Ruane outlines some of the investment principles he'd apply when trying to earn £500 of dividends annually by spending…

Read more »