Most investors know about Rolls-Royce‘s stunning share price ascent — it’s up 87% in 2025 alone. But some lesser-known UK stocks have performed even better since 1 January.

Here are two that have delivered greater price gains, and which I think could continue outperforming the FTSE engineer.

Caledonia Mining

Gold producers have been among the best-performing stocks this year as bullion prices have surged. The yellow metal’s appreciated 57% in 2025, hitting new peaks above $4,100 an ounce in recent days.

Against this backdrop, Caledonia Mining‘s (LSE:CMCL) share price has rocketed 229% since 1 January. Its outperformance reflects the fact that miners’ profits can grow faster than gold prices — their fixed costs mean any extra revenues flow straight into the bottom line.

During quarter two, Caledonia’s EBITDA (earnings before interest, tax, depreciation, and amortisation) increased 52% year on year (excluding gains from asset sales). This surged past the 9% rise in gold prices over the period.

I’m confident yellow metal prices can keep rising, driven by global trade tensions, rising inflation, weak growth, and the falling US dollar. I think Caledonia may be one of the best ways to capitalise on this fertile environment given its excellent operational record.

The company delivered record second-quarter production from its Blanket Mine in Zimbabwe. It now expects to produce 75,500 and 79,500 ounces of gold in 2025, up from a previous forecast of 73,500 to 77,500 ounces.

Caledonia only has one working mine and a number of exploration assets. As a consequence, it’s more vulnerable to production outages than gold stocks with multiple active projects. But on balance it’s still an excellent share to consider, in my view.

Frontier Developments

It’s been tough for video game developers in recent years as consumers have tightened their belts. Uncertainty remains for these tech shares given the murky economic outlook.

But Frontier Developments (LSE:FDEV) has managed to defy the gloom and deliver impressive share price gains in the process. The company — best known for the Elite Dangerous space flight simulator — is up 122% in the year to date.

Frontier’s revenues are recovering strongly as it doubles-down on its core business of creative management simulation (CMS) games. Sales across these titles rose 25% in the 12 months to May, helping the developer to return to profit.

A raft of new CMS titles could deliver a sustained rebound for the gaming giant. Jurassic World Evolution 3 is set for release this October. Two further titles are slated for release in the next few years.

With a strong balance sheet, Frontier has room to invest for future growth while also returning cash to shareholders. It launched a £10m share buyback programme over the summer.

The post Meet the ‘secret’ UK stocks crushing Rolls-Royce shares in 2025… appeared first on The Motley Fool UK.

The UK gaming industry, in particular, has been the focus for some brokers. HSBC likes the chances of major sports betting outfit Entain (LSE: ENT), putting a Buy rating on the stock last Friday (13 September). Two days prior, Berenberg did the same for Frontier Developments (LSE: FDEV), a game developer based in Cambridge.

So what’s all the fuss about?

The up-and-coming gamer

Frontier Developments is a £97m market cap video game company listed on the London Stock Exchange’s AIM index. It grew to fame via its simulation builder games like Elite Dangerous and Rollercoaster Tycoon.

However, after trying different genres it lost money. 

It’s now abandoned that strategy to refocus on its core strengths. Between 2021 and 2024 the share price fell 95% but recovered a bit this year, up 83%. Now at £2.46, it’s clearly far from its all-time high of £33 — but promising, nonetheless.

In its 2024 full-year results released on 10 September, it posted a 56p loss per share, widening a 54p loss from 2023. Both revenue and earnings experienced year-on-year declines of 15% and 2.7%, respectively. However, the results were mostly in line with analyst expectations, with EPS surpassing them by 2.8%.

It has a price-to-sales (P/S) ratio of 1.1, below the industry average and that of several of its competitors. With earnings forecast to grow at 130% per year, it’s expected to become profitable next year.

The stock looks to me like a bargain at this price and I think it could deliver excellent returns if the turnaround works. However, I’m hesitant to jump in right now. I’ll hold off on buying until I see those earnings materialise.

The well-established betting giant

As the parent company of popular high street betting shop Ladbrokes, Entain is a well-established £4.7bn outfit in the UK. But it’s had a rough time lately. With the share price plummeting 66% in the past three years, it became unprofitable in early 2023.

Are those days over now?

From a low of 503p in early August, it’s recovered 45% to 734p. Initial growth was attributed to increased betting during the Euros tournament, but it continued. Looks like something’s got punters back visiting the bookies (physically or digitally). 

With the shares now undervalued by 59% and earnings growing, it’s on track to become profitable again this year. 

So what’s driving the growth and will it continue?

Falling inflation and a strong Q2 trading update are likely the main factors, coupled with the appointment of new CEO Gavin Issacs. 

But it’s not in the clear yet. Entain is performing well, yet evidence suggests it’s economy-dependent. It might keep doing well, but if inflation rises again, the share price could suffer.

Still, analysts have a 12-month price target of £9.30 on average, up 26.5%. That would be a decent windfall, considering I usually lose money at the bookies!

Yes, there’s a bit of risk but I like those odds, so I plan to buy the shares next month.

The post Investors are hunting bargains on the UK stock market! Here are two shares to consider appeared first on The Motley Fool UK.

Begbies Traynor

Investing in UK-focused shares can be risky as economists tip prolonged weakness in the domestic economy. Yet Bebgies Traynor (LSE:BEG) is a stock that could thrive in this landscape.

You see, this company’s operations are about as counter-cyclical as it gets. Demand for its insolvency services is currently soaring as the number of firms experiencing financial distress unfortunately balloons. The AIM share recently announced that “we continue to take an encouraging level of new insolvency appointments across all market segments”.

This week, web-hosting business GoDaddy predicted that as many as 630,000 small and micro businesses could go bust this year. Companies of all sizes are struggling as consumers cut spending, and rising energy bills from April will heap extra pressure on British firms.

Naturally, trading activity at Begbies Traynor could fall as economic conditions improve. But I believe the firm’s aggressive expansion strategy should still deliver excellent long-term earnings growth. Just this month, it paid £400,000 to acquire chartered surveyors Mark Jenkinson & Son.

Frontier Developments

Games developer Frontier Developments (LSE:FDEV) has been having a tough time of late. Its share price slumped in January when it downgraded revenues and profits forecasts due to disappointing festive trading.

Weak sales remains an ongoing danger for the small-cap share too. Not only could turnover suffer as the cost-of-living crisis endures. Intense competition in the video games market is a threat that will never go away.

Frontier shares however, still appeal to me as a long-term investor. The video games market is already bigger than the movie and music industries combined and tipped for further stratospheric growth.

Frontier has shown it has what it takes to make a splash in the industry too. Popular titles include the Jurassic World, F1 Manager and Elite Dangerous, and the business is rapidly increasing its headcount to grow its games portfolio.

Vertu Motors

Demand for big-ticket goods often sinks when economic conditions worsen. So profits at car retailer Vertu Motors (LSE:VTU) are in danger of sustained weakness as the cost-of-living crisis endures.

Despite this, the business could be supported by a surge in demand for electric vehicles (EVs). The Society of Motor Manufacturers and Traders believes 500,000 of these vehicles will be sold in 2022. That’s up from the record 452,527 that hit the road last year.

Consumers are more likely to buy these new-age vehicles from showrooms as well. As a result, Vertu — which has almost 200 sales outlets across the country — is well positioned to win plenty of customers.

There are signs that the EV market is set for strong and sustained growth in the future. I’m expecting this small-cap share to make big profits in the process.

The post 3 UK small-cap shares I’d buy to hold for 10 years! appeared first on The Motley Fool UK.

As such, I can find ideas that can generate me good profits if I choose the right ones. Here are a couple I have on my radar now.

It’s never just a game

Frontier Developments (LSE:FDEV) is a PC and console game developer. Popular games by Frontier include F1 Manager and Jurassic Park Evolution. The share price has dropped by 65% in the past year, with the bulk of that coming in the past few months.

The main reason for the drop was due to a trading update in January where the business announced it would miss revenue and operating profit targets for 2023, due to lower game sales than expected.

However, the half-year results (released just a few days later in January) actually were very positive. Revenue grew by 16% versus H1 2022, with the business also swinging from an operating loss of £1.3m to a profit of £6.9m.

Further, the business has a generous gross profit margin of 63%. This means Frontier is very efficient at controlling the cost of goods sold. In turn, this can help to filter down to a larger net profit.

Even though the expected miss on numbers this year is a risk, I don’t see it as a long-term problem. The business is still growing year-on-year. I feel over the course of this year it can recover the recent drop, providing me with a generous profit.

A growing global business

The second stock is The Pebble Group (LSE:PEBB). With a market-cap of £175m, it sits as a small-cap share. Over the past year, the share price is down 9%.

The company focuses on providing promotional products and services to other brands. This can range from the creative side to more on the delivery. It has offices all around the world, from China to Canada.

I like the business because of the global reach. Even though the company is still relatively small, it has a great foundation to expand due to the offices around the globe. Indeed, it’s already growing, with H1 2022 revenue up 29% on the same period the year before.

If it can continue this strategy, I feel the share price could start to take off later this year as it gets more media and investor attention.

One concern I do have is that the business might struggle to tap into big businesses, as some won’t outsource this area of marketing. It’ll be all cared for in-house, which could hinder growth further down the line.

On balance, I think both ideas could make me money this year, so am looking to buy now.

The post 2 small-cap shares that could supercharge my 2023 profits appeared first on The Motley Fool UK.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Deliveroo

What it does: Deliveroo is one of the UK’s biggest food delivery services. It also has operations in across the world, such as Qatar, the UAE, and Hong Kong.

By John Choong. Having fallen off its highs of £3.86, Deliveroo (LSE:ROO) shares are now trading below £1. Nonetheless, a move back to the pound mark might not be too far away when considering its accelerated growth prospects and better decision-making from management.

Although pulling out of key growth regions such as Australia and the Netherlands didn’t seem like the right move for a growing company, this has allowed Deliveroo to achieve EBITDA profitability this year, much sooner than expected. This is good news for an investor like myself as I’d rather see profits than poor user acquisition.

Consequently, the unicorn company delivered excellent results in its latest trading update, with gross transaction value (GTV), total orders, and GTV per order improving despite gloomy forecasts from analysts who were predicting a blood bath as a result of high inflation impacting discretionary spending. Pair all of that with a strong balance sheet and reasonably cheap price-to-sales multiples, it’s easy to see why I started a position.

John Choong has positions in Deliveroo.

Diploma

What it does: Diploma is a conglomerate made up of businesses focused on specialised industrial distribution.

By Stephen Wright. Most obviously, when it comes to growth shares, I’m looking for something that’s growing and is going to keep doing so. That’s why my growth stock to buy in February is Diploma (LSE:DPLM).

The company released a trading report last month. To me, it seems to indicate continued strong performance. 

Over the last decade, the company has averaged 13% annual revenue growth. And according to its latest update, the top line is currently growing at 30% per year.

As a conglomerate, I’d expect a good amount of Diploma’s growth to come from acquisitions. But the amount of revenue growth from existing businesses was equal to the amount from acquisitions.

The company also also maintained strong operating margins. This indicates that its businesses are resilient even in a difficult macroeconomic environment.

Stephen Wright owns shares in Diploma.

Experian

What it does: Experian is a British technology company that specialises in consumer credit data.

By Edward Sheldon, CFA. Experian (LSE: EXPN) continues to generate solid growth. For the quarter ended 30 December 2022 (Q3 FY2023), the group generated total revenue growth of 7% at constant exchange rates. And looking ahead, it said that it expects to achieve total revenue growth of 8-10% at constant currency for the year ending 31 March 2023, along with “modest” margin accretion.

One reason I’m optimistic about Experian is that its data and analytics can help banks reduce loan losses. In its third-quarter results, the company noted that lender appetite for solutions that help understand loan affordability are increasing. Here in the UK, its ‘decisioning’ revenues were up 15% year on year in Q3.

Now, like a lot of growth shares, Experian has an above-average valuation. Currently, the forward-looking price-to-earnings (P/E) ratio is in the high 20s. I believe it warrants a premium valuation, however, as it’s a high-quality business with a strong economic moat.

Edward Sheldon owns shares in Experian.

Frontier Developments

What it does: Cambridge-based Frontier Developments develops and publishes video games for the interactive entertainment sector.

By Paul Summers. Buying when everyone else is selling can sometimes generate huge profits over the long term. This is why Frontier Developments (LSE: FDEV) is my pick of the growth shares for February.

Things are a bit bleak at Frontier. A profit warning arrived last month following disappointing sales over the Christmas period. Naturally, even the most dedicated gamers are tightening the purse strings at times like this. 

This sticky patch might continue. However, the positives arguably outweigh the negatives. 

Management has set a minimum expectation of revenue coming at “not less than £100m in FY23”. That’s lower than the previous year’s record of £114m but hardly a disaster. Frontier also looks financially solid. 

Having tumbled over 60% in value in the last 12 months, the stock now trades at less than 10 times earnings. That could prove a bargain in time.

Paul Summers has no position in Frontier Developments.

IP Group

What it does: IP Group develops intellectual property-based companies via long-term partnerships with research universities.

By Charlie Carman. IP Group (LSE:IPO) focuses on two sectors. Its life sciences investments total £704.4m and account for 62% of the portfolio. Technology investments make up the remaining 38% at £334m.

Gene sequencing firm Oxford Nanopore Technologies is the company’s largest single position. Admittedly, a substantial haircut in Oxford Nanopore’s valuation since its 2021 flotation has weighed on the IP Group share price.

However, Oxford Nanopore’s recent trading update showed welcome signs of improvement. Full-year 2022 revenues grew across all customer groups.

In addition, IP Group’s cleantech investments look promising. The group owns a 27.5% stake in First Light Fusion, which is developing a new approach to inertial fusion. IP Group estimates the business could double in value to over $1bn by 2025.

Down 35% over 12 months, IP Group shares seem oversold to me. This disruptive company offers shareholders the possibility to benefit from breakthrough technologies with big potential. I’d buy these growth shares.

Charlie Carman does not own shares in IP Group. 

Keywords Studios

What it does: Keywords Studios is the leading technical and creative talent provider to the largest video game studios worldwide.

By Zaven Boyrazian. Investing in the video games industry can be risky. After all, making a game requires a lot of financial resources — and for many studios, a flop can be disastrous.

That’s why Keywords Studios (LSE:KWS) is a far more interesting way to play this space. The company provides technical and creative services to the largest development houses in the world.

Whenever working on a new project, studios often rely on Keywords to supply the crucial talent needed. With a reputation for quality, the demand for Keywords’ services has steadily risen over the years. And the best part is, even if a finished game fails to meet sales expectations, Keywords still get paid.

As per the latest trading update, full-year revenue for 2022 is expected to be 32% higher than a year ago, with pre-tax profits increasing by 28%, well ahead of analyst expectations. While a slowdown in consumer spending might create some indirect short-term headwinds, the long-term potential continues to excite me.

Zaven Boyrazian owns shares in Keywords Studios.

Watches of Switzerland Group 

What it does: Watches of Switzerland is an international retailer of the most prestigious and recognised luxury watch and jewellery brands. 

By G A Chester. The mid-cap FTSE 250 index underperformed the blue-chip FTSE 100 by a wide margin last year. Yet many mid-caps have higher growth potential than the Footsie’s elephants. 

One stock I’m particularly keen on right now is Watches of Switzerland Group (LSE: WOSG). Despite a continuing strong business performance through 2022, its shares fell more than 40% over the year. 

I like the company’s longstanding, collaborative partnerships with top-tier luxury brand owners. These partnerships represent a barrier to new entrants to the market. And I like its growth prospects. It has a leading position in the UK, a growing presence in the US (it’s aiming to be the clear market leader there, too) and opportunities in Europe.  

There’s a risk it may encounter setbacks in its expansion, but I’m encouraged by the continuing good execution of its growth strategy. I’m expecting it to report further progress in a trading update on 9 February. 

G A Chester does not own shares in Watches of Switzerland.

The post Best British growth shares to buy for February appeared first on The Motley Fool UK.

I’ve been thinking about investing in Frontier Developments shares for a long time. Is this the dip-buying opportunity investors have been waiting for?

So what’s going on?

In a half-year update Frontier said that sales rose 16% in the six months to December.

The games developer and publisher said that sales of its internally-developed titles that were released before the current financial year had performed in line with expectations. Popular titles here include Elite Dangerous and the first two titles in its Jurassic World Evolution franchise.

But this is where the good news ended. It noted that sales of these titles had fallen below expectations during key price promotions last month. It also said that sales of its F1 Manager 2022 (which launched in August) had underperformed over the festive period as it witnessed “evidence of increased player price sensitivity”.

The AIM business also said it was reviewing its strategy for its Frontier Foundry third-party publishing arm. This is due to the division’s “mixed experience… of financial success” since it launched in 2019, as well as competitive market conditions.

Forecasts cut to 2024

Due to these pressures, Frontier no longer expects to meet broker forecasts. These suggested revenues of £135m and operating profit of £19m in financial 2023.

It also said that “the number of variables and the more challenging economic outlook” means the business now expects to make sales “of not less than £100m” this year. Frontier made record turnover of £114m in the previous 12-month period.

Sales of around £100m would result in an operating margin of 2% and operating profit of around £2m, Frontier said.

The firm also reduced its revenues estimates for financial 2024 and it now expects growth of just 5%. We’re told this reflects “current market and portfolio uncertainties, and the absence of new titles from Foundry” next year.

Time to invest?

As a UK share investor I’m excited by the rate at which the video games market looks set to grow. Analysts at Grand View research, for example, expect the global leisure software market to be worth $584bn by 2030. That’s more than double the $221bn it was valued at last year.

This is why I bought software services provider Keywords Studios in the spring of 2021. There are many other UK shares I’m considering buying to exploit this opportunity too.

However, following today’s news I don’t intend to buy Frontier Developments shares. The business is already struggling to shift key titles. Intense competition in the games market means that sales of these titles could remain weak beyond the medium term. Uncertainty over the future of Frontier Foundry adds another layer of risk.

Today Frontier shares carry a forward price-to-earnings growth (PEG) ratio of just 0.1. But despite this cheapness I’d rather find other British tech stocks to buy.

The post Should investors NOW load up on this cheap UK share that’s down 40%? appeared first on The Motley Fool UK.

Well known for its Rollercoaster Tycoon games in the early 2000s, Frontier has successfully transferred that experience into a range of games that follow a similar strategic principle while appealing to wider audiences. 

Adrenaline rush

Part of that wider appeal came with Jurassic World Evolution in 2018 and its sequel in 2021. In its latest earnings report in September, Frontier reported annual revenue growth of 26% to £114m for the last year. The company credited its success to the release of Jurassic World Evolution 2. The company’s latest release is F1 Manager 2022. This is the first in a new franchise of Formula 1 games where players can take on the role of team principal instead of driver. 

Released in August, it’s too early to tell how much of an impact the new game has had on Frontier’s revenue. However, F1 Manager 2022 beat the all-time player peak of Jurassic World Evolution 2 by around 20% on Steam, which bodes well for the new franchise. As a yearly title,the F1 Manager series will grow and improve quicker than some of Frontier’s other franchises that have longer breaks between entries. 

Despite the recent success of its games and a 26% increase in revenue, Frontier Developments stock is trading at close to its lowest price since March 2020. At £13.98 per share, the stock is currently around 58% down on its January 2021 peak price of £33. 

Licence to thrill

Over the last two years, the Frontier share price has been on a rollercoaster of investor whim. The price crashed in November 2021 after the company warned investors that Jurassic World Evolution 2 sales would be lower than expected. We now know that sales were better than predicted. Yet the price has not gone back up to reflect that. As such, I believe that Frontier Developments stock is currently a bargain. 

Not only does the video game developer have successful franchises like Jurassic World Evolution and Elite Dangerous under its belt, but it has now added F1 Manager at a time when interest in Formula 1 is skyrocketing across the globe.

However, even with a popular licence like Formula 1, it’s difficult for any video game developer to balance a yearly series. The studio needs to ensure that players are happy with each release while providing enough new content in the next game to bring them back.

With F1 Manager 22, I’m confident Frontier has the basis from which it can build this series into a successful yearly franchise. Therefore, I’ll be adding Frontier Developments stock to my portfolio in the coming weeks.

The post Why now could be a great time for me to invest £1,000 in this UK video game stock appeared first on The Motley Fool UK.

That said, it doesn’t mean I should go out and buy every beaten-down stock. Plenty of companies are being sold off for good reasons.

But for the high-quality businesses capable of enduring short-term disruptions and thriving for the next decade, I see only opportunity. And there are two stocks already in my portfolio that I’m planning on buying more of in my next round of capital injection.

One of the best?

Volatility in foreign currency exchange rates creates a lot of headaches. But for Alpha FX (LSE:AFX), it breeds opportunity. The financial services group provides currency risk management and alternative banking solutions.

With all the volatility seen in 2022, demand for its services is rising. As a result, the group has increased its FX client base from 881 at the end of 2021 to 975 today. Meanwhile, its alternative banking division is seeing a surge in popularity, with total customers jumping from 1,746 to 3,061 in the last six months.

As such, its latest interim results reported revenue and pre-tax profits growing by 35% and 16% respectively, versus a year ago. Yet despite this impressive performance, the stock is down around 15% in the last 12 months. Why?

Profit margins have taken a hit due to increased internal investments that have yet to deliver value. Meanwhile, the surge in FX volatility, especially concerning the US dollar, does open the door to higher operating risks for this business. If its traders fail to correctly predict trends, it could significantly harm client relationships.

Nevertheless, Alpha FX’s track record of navigating volatility seems solid, in my eyes. And while its P/E ratio of 26 is certainly not cheap, it looks like a fair price to pay given the long-term potential of this rapidly expanding enterprise.

A potential return to glory?

The video game sector experienced some immense growth during the pandemic, as lockdowns provided a nice tailwind for demand. That helped propel the Frontier Developments (LSE:FDEV) share price to impressive heights.

Unfortunately, following the poorly-received Odyssey expansion to its Elite Dangerous franchise and lower-than-anticipated early sales for its Jurassic World Evolution 2 title, its market capitalisation was pounded into oblivion, falling by 50% in the last 12 months.

However, looking at its latest results, things seem to be improving. Sales of Jurassic World have caught up, delivering more than £60m in revenue since launch. Its other IPs continue to retain high popularity following the release of additional paid content. And its highly anticipated Formula 1 title was released to critical acclaim along with strong sales.

So it’s not surprising that overall top-line sales have hit an all-time high of £114m. Impairment charges relating to Odyssey have sent profits down the drain, elevating the investment risk. Even more so now that rising interest rates are making raising external capital more expensive.

Yet this is a one-time charge. And Frontier’s pipeline of upcoming titles looks impressive, in my opinion. That’s why I feel the drop in stock price makes it potentially a bargain right now.

The post Are these the best shares to buy now for the next decade? appeared first on The Motley Fool UK.

And here are two on my radar today.

Frontier Developments

The video games industry has ballooned in size over the past decade and today it’s worth more than the film and music industries combined.

And thanks to rapid technological improvements — which have given birth to the e-sports craze — it looks poised for further explosive growth during the next 10 years.

That’s why I’ve invested in technical and creative services business Keywords Studios. And it’s why I’m thinking about buying games studio Frontier Developments (LSE: FDEV) shares for my portfolio as well.

Frontier has a number of ultra-popular games franchises under its belt. These include the Jurassic World, F1 Manager and Elite Dangerous titles. And right now they’re in extremely high demand. They powered revenues at the business 26% higher in the 12 months to May to record levels of £114m.

The games industry is hugely competitive. And costly game development problems can be common, so success here isn’t guaranteed. But Frontier’s impressive momentum and the huge investment it’s making in software development are very encouraging. The business raised its headcount by as much as a quarter last year.

I also think the tech company’s low valuation bakes in the threat posed by rival developers. Today, it trades on a price-to-earnings growth (PEG) ratio of just 0.4. A reading below 1 suggests that a stock is undervalued.

Glencore

I think Glencore’s (LSE: GLEN) a great share to buy to exploit the upcoming commodities supercycle.

Some of the raw materials it mines and trades include copper, which is a key component in electric vehicles (EVs) and renewable energy technology, plus nickel and zinc. These materials are used in the manufacture of EV batteries. 

It also mines iron ore and ferroalloys, demand for which should soar amid global construction activity, plus aluminium, whose applications include power lines, consumer electronics and skyscrapers.

Glencore’s more recent push into lithium adds extra appeal too. It’s inked deals to become involved in the recycling of lithium-ion batteries. And according to reports it’s looking to begin trading the battery metal to exploit soaring EV demand.

I’m a little concerned about the company’s huge exposure to fossil fuels. For example, 24% of group earnings are generated from coal production. This is a risk as the world transitions from dirtier fuels towards other sources like renewables.

Having said that, I believe the bright demand outlook for Glencore’s other commodities makes up for this.

Today the FTSE 100 firm trades on a forward price-to-earnings (P/E) ratio of 3.8 times. On top of this it boasts a gigantic 10.2% dividend yield. I think it’s a top value stock to buy right now.

The post 2 cheap shares to buy and hold to 2030! appeared first on The Motley Fool UK.

Over the past few days and weeks, UK stocks have been bouncing up off their lows all over the place. And it’s starting to look like the market is bottoming after the bear run of the past few months.

Retreating commodity prices

Other positive signs include the retreat of many commodity prices such as oil, copper, iron ore, lumber and wheat. Many had spiked up fuelling the inflation misery we’ve been experiencing. So I see an easing back of commodity prices as a positive. And the situation could be an early indicator of lower inflation later.

However, I am just trying to read the economic tea leaves. A better approach is to focus on the news flowing from the companies I’m interested in owning. And, in many cases, news has been positive for businesses.

Meanwhile, valuations have become attractive. The consumer-facing cyclical stocks have been particularly bombed-out in the bear market. But they’ve been bouncing back into life, and I’ve bought a few of them. Is now the time to invest in stocks? For me, the answer is, yes!

One of my recent purchases was Frontier Developments (LSE: FDEV). The company develops and publishes video games for the interactive entertainment sector. And with the share price near 1,416p, it’s down around 57% from its 2021 high. Over the past year, the decline has been about 46%.

Growth at a price

However, the company still has a racy valuation. City analysts expect earnings to surge back in the current trading year to May 2023 with a rise of about 135%. They could always be wrong. But the market has assigned a forward-looking price-to-earnings ratio of around 31 for that year. So, even after the plunge, FDEV isn’t in the bargain basement.

Nevertheless, I see the business as a high-growth proposition despite its history of lumpy earnings. The compound annual growth rate for earnings is running just below an impressive 70%. And, rightly or wrongly, I see the current slump in the share price as an opportunity.

Good news in the bag

One of the rules in my investment strategy requires businesses to have a recent positive trading update. And FDEV delivered one on 14 June, trumpeting a “strong” second half and “record” annual revenue growth of 26%.

Looking ahead, the directors said they expect Frontier to grow revenue by around 20% on average per annum over the medium term. And variations in the rate of growth will likely be driven by “the number and scale of new [product] releases in each year”. And I reckon that outlook statement goes some way towards explaining the volatile earnings history of the business.

There are no guarantees of a positive long-term investment outcome for me with Frontier Developments. And all companies can experience operational setbacks from time to time. Nevertheless, I’ve been buying stocks like FDEV now to hold for years as operational progress unfolds.

The post Yes! It’s time to invest in stocks like this one right now appeared first on The Motley Fool UK.