The Motley Fool

Here are 3 of the most expensive UK stocks this September. Should I buy?

Image source: Getty Images

2020 has been a tough year for UK stocks. Some have tanked, while others have soared, and for many the outlook is blurry. Until the coronavirus pandemic is under control, stock markets are likely to remain on this volatile path. There are now several shares trading at astronomical price points. Are they worth it?

Wargame wonder

First up, FTSE 250 stock Games Workshop (LSE:GAW) is trading at around £92 a share. It has a P/E ratio of 42, earnings per share are £2.18 and continues to pay a dividend. With its share price rocketing 52% year-to-date, the dividend yield has fallen and is now around 0.33%.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Games Workshop can largely put its success down to the popularity of its tabletop miniature wargame Warhammer. The company has gone all out, boosting its reach and embracing demand for the game by partnering with organisations such as the Scouts and Duke of Edinburgh’s Award. The game is one that parents can enjoy with their children, which has further enhanced its staying power.

Games Workshop UK Stock

Lockdown caused all Games Workshop stores and clubs to close, but the love of the game has not abated, and online sales have increased. 

The company has significant operational gearing, through the rent of premises, software, production and more. This means if sales continue to rise, it could be a great investment. But obviously, if sales decline, then it could have problems.

Yet City analysts remain bullish on the GAW share price, forecasting a target of £89-£120 for the year ahead. I think it is expensive, but the tabletop gaming niche is a popular one.

Money in UK stocks

Next up is the London Stock Exchange (LSE:LSE), which has enjoyed a share price rise of 14% year-to-date. The LSE share price is now around £88 and its P/E is 74, which also makes it an expensive UK stock to buy. It posted positive interim results to the end of June and increased its dividend to 23.3p, giving a yield of 0.26% and earnings per share are £1.19. It is attempting to take over financial data analytics firm Refinitiv, but is up against an in-depth anti-trust investigation by the European commission. I think the positive sentiment originally surrounding this deal, along with economic uncertainty, pushed investors to see the London Stock Exchange as a safe haven. Unfortunately, the Refinitiv deal is under a cloud and to get approval may require selling assets, reducing the value of the company. This puts its share price at risk of a sharp decline.  

Shares in AstraZeneca are trading around £83, up 8% year-to-date. This pharma giant has one of the highest P/Es around at 94. It is developing a Covid-19 vaccine with Oxford University, which you would think might boost its share price. However, it is unlikely to profit much from this deal as those developing vaccines have promised to keep prices low. Yet AstraZeneca also makes a wide range of reputable medicines, including cancer treatments, which I think will stand it in good stead going forward. Earnings per share are 78p and its dividend yield is 0.82%.

These are very expensive UK stocks, so would I buy any of them this month? Well, I would consider all of them in a dip. But to invest money to get good returns, I would follow a value investing strategy, which just is not possible with such high-priced stocks.

Are you looking for UK stocks with growth potential that could boost your financial portfolio? Let us help you get started...

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.