If you’d bought into Games Workshop Group (LSE: GWP) around the middle of the decade you’d be laughing right now. The business, one of the leading manufacturers and retailers of fantasy figures and board games in the world, has seen its market value boom more than 700% over the past five years.
Since mid-April alone, its share price has really picked up the pace, hitting record high after record high and punching through the £50 barrier at one point. In total, Games Workshop has delivered shareholder returns in the region of a whopping 50.5% over the last 12 months. I also believe it has all the ingredients to keep impressing.
Make monster returns
There are very few companies which do what this FTSE 250 giant does. Through its vast network of shops Games Workshop has created a loyal community of customers who come to chat, paint and buy all-things Warhammer.
This dynamic allows it to thrive in spite of tough times for the retail sector. Just last week, it said sales for the last fiscal year jumped a handsome 16% to some £254m. And there’s plenty of reason, at least in this Fool’s opinion, to expect sales growth to remain impressive as it bolsters its store network to unite fantasy fans all over the world.
Games Workshop has always been expensive and remains so, the retailer currently sporting a forward P/E ratio of 23 times. I would consider it’s leading proposition in a niche market to warrant such a hefty premium, however, and I predict its global expansion programme will keep producing blowout shareholder gains.
Another wise buy?
Pets At Home Group (LSE: PETS) is another FTSE 250 share which has dealt out some seriously great returns over the past year. These have clocked in at astonishing 69.4%, chiefly because of its share price surge to 21-month highs above 200p per share.
I’ve long been cautious over the pet care specialist because of the toughening retail landscape and the price wars for pet food led by Britain’s supermarkets and online giant Amazon. But Pets At Home’s resilience is something to behold. Namely its ability to grab share-driving like-for-like revenues 5.7% higher in the last fiscal year and allowing it to return to profit quicker than it had anticipated.
Does it have the gumption to keep going? I’m not so sure. Retail conditions here are going from bad to worse. Latest research from the British Retail Consortium shows total sales in the UK in June were “the worst on record.” Needless to say, hopes of more splendid sales growth over at the animal superstore could be considered a little fragile.
A forward P/E ratio of 14.7 times for Pets At Home isn’t high, meaning the share price probably won’t slip off a cliff should sales growth begin to slow. I’m fearful, though, it will struggle to deliver anywhere near the sort of returns shareholders have enjoyed over the past year. And for this reason I’m happy to give it a miss today.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. 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.
Motley Fool UK 2019