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Is Games Workshop's (LON:GAW) share price in for a bumpy ride?

1st Apr '19 by Jack Brumby

Games Workshop (LON:GAW) is classified as a 'High Flyer' stock: a heady mix of high quality, high momentum, and low value.

Some of the market's biggest multibaggers were a High Flyer at one point or another, but beware - this is a dangerous (if potentially lucrative) part of the market to play in.

Games Workshop (LON:GAW) is a mid cap stock in the Leisure Products industry and is responsible for such famous fantasy characters as 'Ghazghkull Mag Uruk Thraka' and 'Nurgle' who is, apparently, a Plague Lord. When we analyse Games Workshop from a factor perspective, we find that it has a: 

  • Quality Rank of 95,
  • Momentum Rank of 83, 
  • Value Rank of only 35. 

This is the classic factor profile of a High Flyer.


A combination of high quality, high momentum and low value is great when earnings go up but a bad place to be when things go wrong. The higher they rise the harder they fall, after all.


Games Workshop (LON:GAW): flying high but is it safe?

So, High Flyers tend to be riskier and more volatile than the market average. But is this true of Games Workshop?

We can find out quickly by applying Stockopedia’s RiskRatings system, which divides stocks into five groups according to stock price volatility. The five classifications (from most to least volatile) are:

  • Highly Speculative (30% of the market),
  • Speculative (25% of the market), 
  • Adventurous (20% of the market),
  • Balanced (15% of the market), and
  • Conservative (10% of the market)

Games Workshop is an Adventurous stock. This means that the group is towards the more volatile end of the market in terms of stock price volatility, as might be expected of a High Flyer. Those looking to invest here should prepare themselves for a potentially bumpy ride.

One thing in Games Workshop’s favour is its above average five-year return on capital employed figure of 45.5%. Being consistently profitable to such a degree over multiple years suggests that Games Workshop can back up its favourable factor exposures with some kind of economic moat and, hopefully, make any share price volatility more bearable in the short term.

This attractive blend of factors and profitability characteristics has been noticed by the market - Games Workshop has a one-year relative strength of 34.0%.

Find the rockstars of the stock market

High Flyers are great stocks to have in your portfolio if you think you need more momentum or quality - just look out for signs that momentum might be changing. If you want to see which other stocks qualify as High Flyers, you can find a comprehensive list on Stockopedia's StockRanks page.

Simple tools can help us better measure and understand the risks we take. That's why the Stockopedia team has been busy building new ways of understanding investment risks and company characteristics. In this webinar, we talk about two or our most popular innovations: StockRank Styles and RiskRatings. These indicators transform a ton of vital financial information into intuitive classifications, allowing you to get an instant feel for any company on any market - sign up for a free trial to see how your stocks stack up.

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