As a long-term investor, I like the idea of buying shares in great companies at attractive prices, then holding them for years or even decades. While many UK shares look cheap to me, not all do. So it is not always possible to buy the shares I want at a price I like.
Still, here are three UK shares on my watchlist I’ll happily tuck into my portfolio with an eye to holding for the long run, once I can buy them at what I think is an attractive price.
Games Workshop
Games Workshop (LSE: GAW) has already been a strong performer over the long term. Its share price has grown 98% over the past five years.
That does not mean it will keep doing so, of course. But I see a lot of things to like about the firm and its business model.
It has built a loyal customer following. That means that not only can it make money by selling them gaming accessories, at a high profit margin, but it can also reap rewards in other ways. For example, by licensing its unique intellectual property, Games Workshop has found a powerful way to make money from the fantasy universe it has created.
In a tight economy, pricy fantasy models may seem like less of an important purchase, which is a risk for the company.
Spirax
I have the same feeling about engineering company Spirax (LSE: SPX): love the business, but not its current share price.
Still, after a 31% fall in the past year alone, the Spirax share price is getting closer to a level at which I would be happy to invest.
Unlike some blue-chip UK shares, this company is not a household name due to its business-to-business focus. By developing a wide product offering in areas that can be vital for the smooth running of an industrial company’s operations, Spirax has given itself pricing power. Building close relationships and creating bespoke solutions to specific needs has helped to deepen such relationships.
Weaker demand in large projects, notably in China and Korea, pose an ongoing risk to profits. But I see Spirax as a quality firm and its 55-year track record of annual dividend per share growth demonstrate the power of its business model.
Rolls-Royce
Few UK shares have performed as well in recent years as aeronautical engineer Rolls-Royce (LSE: RR). The share price has soared 848% in the past five years.
The attraction of the business is clear. It has a large installed base of aircraft engines that need to be serviced. It is one of a small number of engine makers competing for new orders in the civil aviation sector.
On top of that, its two other business areas of defence and power systems are both benefitting from higher demand trends that look set to last for years.
One thing I do not like about civil aviation as an investor, though, is that demand can suddenly drop unexpectedly. We saw it in the pandemic and before that the financial crisis and following the 2001 US terrorist attacks. I think the Rolls-Royce share price is too high for now to offer me the margin of safety I seek.
