Is Games Workshop a top stock to consider buying in December for the long haul?

With Games Workshop updating on its deal with Amazon, is the UK company a stock to think about buying for long-term investors?

| 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.

Image source: Games Workshop plc

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.

So far, I’ve failed to buy growth stock Games Workshop (LSE: GAW). That’s a shame because over the past eight years it’s risen by more than 2,100%. 

Created with Highcharts 11.4.3Games Workshop Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The miniature figure and games maker has proven to be quite a phenomenon, and I didn’t see it coming. 

I have my own inner nerd, but failed to understand the mushrooming attraction and enthusiasm for Games Workshop’s crafted fantasy universe — I have not been worthy.

Should you invest £1,000 in J D Wetherspoon Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if J D Wetherspoon Plc made the list?

See the 6 stocks

A transformational agreement?

Is it too late to get involved with the shares? I don’t think so. The company reignited investor interest a year ago when it announced an agreement with Amazon.Com subsidiary Amazon Content Services.

The move was an early step towards the American giant’s prospective development of Games Workshop’s Warhammer 40,000 universe into films and TV shows along with associated merchandising rights.

Wow! If that doesn’t get any warm-blooded investor’s pulse racing, nothing will. However, all those potential future earnings were never going to arrive quickly. In December 2023, Games Workshop said the two firms planned to work together for a period of 12 months to agree creative guidelines for the films and television series to be developed by Amazon”.

Fast-forward to today (10 December) — almost exactly one year later — and there’s another announcement from the company.

Games Workshop has reached a final agreement with Amazon Content Services and the two firms have developed those creative guidelines as promised a year earlier. Amazon now has exclusive rights in relation to films and TV shows set within the Warhammer 40,000 universe. 

This is awesome, right? If Amazon gets going on this, we could see another hit TV or video series ahead and more.  However, there’s a reality check in today’s statement. The firm said the production processes in respect of these shows “may take a number of years”.

An elevated valuation

On top of that the company said there’s no change to its forecast for the 52-week period ending 1 June 2025. Meanwhile, City analysts predict normalised earnings will likely rise by modest single-digit percentages that year and the one after.

If Games Workshop didn’t have the Amazon carrot dangling in front of it, there’s a case to make that the business might have slipped into slow-growth mode. The forward-looking estimates for earnings have been quite low for some time.

Meanwhile, investor enthusiasm has driven the share price higher and the valuation looks pretty meaty these days.

With the share price near 13,900p, the forward-looking price-to-earnings (P/E) rating is running at about 27 for 2026. At that level, one of the biggest risks for new shareholders now is the possibility of a de-rating lower over the coming years.

Nevertheless, Games Workshop has a strong balance sheet and a well-defended market niche. Its products are popular and there’s the potential for a step-change higher in earnings ahead. So I think the business may be worth investors’ research and consideration time now with a long-term holding period in mind.

But there may be an even bigger investment opportunity that’s caught my eye:

Investing in AI: 3 Stocks with Huge Potential!

🤖 Are you fascinated by the potential of AI? 🤖

Imagine investing in cutting-edge technology just once, then watching as it evolves and grows, transforming industries and potentially even yielding substantial returns.

If the idea of being part of the AI revolution excites you, along with the prospect of significant potential gains on your initial investment…

Then you won't want to miss this special report inside Motley Fool Share Advisor – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And today, we're giving you exclusive access to ONE of these top AI stock picks, absolutely free!

Get your free AI stock pick

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. Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon 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.

More on Investing Articles

Investing Articles

3 shares I’ve bought in the 2025 stock market sell-off

The stock market has experienced a lot of turbulence in recent weeks. Edward Sheldon has been taking advantage and buying…

Read more »

Investing Articles

Investors considering HSBC shares could aim for £8,453 a year in passive income from just £5 a day!

A relatively small daily investment in HSBC shares over several years can produce an extraordinary level of annual passive income…

Read more »

Investing Articles

The Rolls-Royce share price has fallen! Is this the moment investors have been waiting for?

Even the Rolls-Royce share price can't escape current stock market volatility, falling slightly over the last week. Should investors consider…

Read more »

Modern suburban family houses with car on driveway
Investing Articles

Down 59% from its 12-month highs, is this FTSE 250 stock too cheap to ignore?

Shares in FTSE 250 housebuilder Vistry are almost certainly too cheap to ignore. But are they discounted enough to offset…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

As the S&P 500 struggles to recover, here’s what Warren Buffett’s doing

The S&P 500 is fighting to regain its February highs amid ongoing trade tariff uncertainty. Our writer looks to the…

Read more »

Investing Articles

When will Lloyds shares hit £1?

Lloyds shares have surged over the past 12 months, but where will they go next? Dr James Fox thinks there’s…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Stock-market crash: the meltdown of the Magnificent 7

Just before Christmas, these Magnificent Seven stocks were riding high. But after the worst quarter for US stocks since autumn…

Read more »

Investing Articles

Wow! IAG shares are undervalued by 47%, according to analysts

IAG shares have surged over the past 18 months, but analysts are pointing to more growth. Dr James Fox takes…

Read more »