The Cineworld (LSE: CINE) share price is up a little over 50% in the last month alone. As someone who’s long avoided the stock, am I bothered? Not in the slightest. In my view, the company is still uninvestable.
Cineworld’s problems go beyond the ‘temporary’ closure of its cinemas. Highly indebted before the pandemic took hold, it was also facing stiff competition from the likes of Netflix and Amazon Prime for viewers’ eyeballs. The recent news that Warner Bros will stream new films at the same time as they hit the silver screen is yet another hurdle for the company to negotiate.
Given this, it’s perhaps no surprise that Cineworld remains one of the most shorted stocks on the market. As such, it has no place in my strategy for getting rich and retiring early. Instead, I’m focused on buying great UK companies with promising futures.
Better bet than the Cineworld share price
Investment platform provider AJ Bell (LSE: AJB) is one example. It released some impressive numbers last week, further underlining the £1.8bn-cap’s potential to grow investors’ cash over time.
Revenue rose 21% to £126.7m over the 12 months to the end of September. Pre-tax profit fared even better, jumping 29% to £48.6m, thanks to “record dealing activity.“
Although not an income stock, it’s also worth highlighting the total dividend came to 6.16p per share. That’s 28% up on last year. If that’s not a sign of management confidence, I’m not sure what is!
Indeed, according to CEO Andy Bell, the company is in a great position to benefit from the “long-term growth drivers of the platform market.” It’s certainly attracting more business. Total customer numbers rose 27% to over 295,000 over FY20.
Not only is AJ Bell attracting new customers, but it’s also holding on to them. Customer retention “remained high” at 95.5% over the period. Loyalty/inertia like this will likely help mitigate the introduction of higher fees on some accounts going forward.
Of course, the time to buy AJ Bell was back in March. Anyone doing so would be sitting on a gain of around 70%. No matter. At only a quarter of the size of peer Hargreaves Lansdown, I think there’s plenty of growth left to come.
At 48 times earnings, AJ Bell is eye-wateringly expensive but it’s a holding I intend to add to on any temporary dips.
Fantasy figurine-maker Games Workshop (LSE: GAW) is another quality UK stock I’d buy over a binary ‘bounce or bust’ play like the Cineworld share price.
Yesterday’s half-year trading update may have been brief but it was still highly impressive.
The company now believes it’s made sales of £185m over the six months to 29 November. This has sent profits soaring to £90m – 53% higher than over the same period in 2019. On top of this, management declared a 60p per share special dividend in accordance with its rule of returning “truly surplus cash” to its owners.
On a forecast P/E of 30, shares in Games Workshop are undoubtedly expensive. Then again, a ‘one of a kind’ company in a niche market, generating high margins and boasting significant cash reserves surely warrants its premium rating.
There will likely come a time when market expectations become unrealistic but, for now, the FTSE 250 member’s purple patch looks set to continue. I doubt the Cineworld share price can keep up.
Paul Summers owns shares of AJ Bell PLC. 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.