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Because the inventory market rises, discovering undervalued alternatives turns into increasingly more tough. However I feel UK shares are nonetheless probably the most promising place for traders to look.
Whether or not it’s companies producing double-digit gross sales development or out-of-fashion shares buying and selling at discounted valuations, the FTSE 100 has shares to swimsuit all kinds. Listed here are two to contemplate subsequent month.
Video games Workshop
Video games Workshop‘s (LSE:GAW) an awesome illustration of the truth that companies don’t should arrange their manufacturing in China to achieve success. Most of its manufacturing’s based mostly in Nottingham.
This does imply that tariff uncertainty could be a threat. And that’s very true for a enterprise that makes discretionary merchandise, fairly than issues individuals want.
Video games Workshop nonetheless has sturdy mental property. Meaning larger prices gained’t make US shoppers change to a neighborhood Warhammer producer the way in which they could with different merchandise.
That’s why the corporate’s persevering with to carry out strongly. The most recent outcomes present 17% income development, earnings per share additionally up 17%, and a 40% enhance within the dividend.
At a price-to-earnings (P/E) ratio of 27, the inventory isn’t clearly low-cost. However low capital necessities imply there’s nonetheless a dividend with a 3.25% yield even at in the present day’s costs.
Video games Workshop shares have generated excellent returns for traders over the past 5 years. However sturdy buying and selling means I nonetheless assume they’re price contemplating at in the present day’s costs.
Croda Worldwide
Croda Worldwide‘s (LSE:CRDA) a speciality chemical compounds enterprise based mostly in Goole. Earlier this week, the corporate introduced a dividend enhance, extending its streak to 34 consecutive years.
The agency additionally reported 4.9% larger gross sales and earnings per share for the primary half of 2025, with development in each division. However the inventory market didn’t like this in any respect and the share value fell 10%.
Supply: Croda Worldwide H1 2025 Presentation
One motive is that development in Q2 was slower than Q1. However the larger challenge – for my part – is larger working capital necessities meant free money flows fell to lower than 50% of the dividend.
In different phrases, Croda’s at present paying out extra to shareholders than it’s bringing in. The agency lined the distinction by rising its debt, however that’s not sustainable over the long run.
If gross sales continue to grow nonetheless, it shouldn’t have to. The corporate’s seeking to decrease its working capital necessities and in the event that they stabilise, I feel issues may get again on observe fairly shortly.
Croda’s adjusted earnings per share are nearly double its dividend. With the inventory at a 10-year low and a dividend yield of 4.25% it’s price excited about ‘being grasping when others are fearful’, to cite billionaire investor Warren Buffett..
Lengthy-term investing
Video games Workshop shares commerce at a a number of reflecting expectations of future development. And Croda Worldwide’s going via a difficult interval when it comes to its inventories and dealing capital.
For that motive, traders pondering of shopping for both inventory should be prepared to take a long-term view. However each corporations have sturdy strengths that give them benefits over opponents.
That is why I feel each shares are price contemplating in August. Whereas share costs will be unstable within the brief time period, shares in sturdy companies are usually good investments over time.
