Premium content from Motley Fool Hidden Winners UK
Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.
“Best Buys Now” Pick #1:
Bloomsbury Publishing (LSE:BMY)
Why we like it: “Bloomsbury’s (LSE: BMY) best known for being the publisher of the Harry Potter series of books in the UK. The books continue to be bestsellers some 26 years after the boy wizard’s first appearance. Much like share investors hoping to spot the next Microsoft before anyone else, the same is true in publishing where taking a risk on an unknown talent can pay enormous dividends in the long run. The company appears to have unearthed another gem in fantasy author Sarah J. Maas, whose latest book, House of Flame and Shadow, helped the company perform far ahead of analysts’ expectations.
“The success of House of Flame and Shadow has driven demand for the author’s previous 15 books published by Bloomsbury as readers want to buy the whole set to be up to date. Bloomsbury says fantasy has grown in popularity around the world – with the sci-fi and fantasy genre growing by 54% in the last five years, according to Nielsen Bookscan. While there’s likely to be an element of feast and famine with consumer sales, as audience’s tastes are unpredictable, investors can be given comfort by the further six books Bloomsbury has under contract with Sarah J Maas, which seem likely to sell well.”
Why we like it now: While Bloomsbury’s FY 25 results looked uninspiring against a strong prior year, looking forward the consumer division should be given a boost by the new Harry Potter television show as well as the (yet to be announced) new release by Sarah J. Maas. Without any books by star author Maas in 2025, total sales grew 5%, with profit declining from £48.8m to £42m as the consumer profit margin returned to a normalised level following the exceptional sales and high operational gearing in 2024. The company’s academic and professional division is being affected by budgetary pressures in the US and UK and “the accelerated shift from print to digital” – though as an owner of trusted academic and professional IP, the company could develop powerful educational AI tools. Without a new title by Maas, and with non-consumer division facing struggles, the market has shown impatience by marking down the company’s share price. But to us, a forward P/E of just 14 could provide a good entry point for long-term investors, providing sales and profits can regain their former fizz.
