Here are 3 of the most expensive UK stocks this September. Should I buy?

The pandemic has caused ups and downs for UK stocks. Here are some of the most expensive ones this month. Do they still offer value?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

2020 has been a tough year for UK stocks. Some have tanked, while others have soared, and for many the outlook is blurry. Until the coronavirus pandemic is under control, stock markets are likely to remain on this volatile path. There are now several shares trading at astronomical price points. Are they worth it?

Wargame wonder

First up, FTSE 250 stock Games Workshop (LSE:GAW) is trading at around £92 a share. It has a P/E ratio of 42, earnings per share are £2.18 and continues to pay a dividend. With its share price rocketing 52% year-to-date, the dividend yield has fallen and is now around 0.33%.

Games Workshop can largely put its success down to the popularity of its tabletop miniature wargame Warhammer. The company has gone all out, boosting its reach and embracing demand for the game by partnering with organisations such as the Scouts and Duke of Edinburgh’s Award. The game is one that parents can enjoy with their children, which has further enhanced its staying power.

Games Workshop UK Stock

Lockdown caused all Games Workshop stores and clubs to close, but the love of the game has not abated, and online sales have increased. 

The company has significant operational gearing, through the rent of premises, software, production and more. This means if sales continue to rise, it could be a great investment. But obviously, if sales decline, then it could have problems.

Yet City analysts remain bullish on the GAW share price, forecasting a target of £89-£120 for the year ahead. I think it is expensive, but the tabletop gaming niche is a popular one.

Money in UK stocks

Next up is the London Stock Exchange (LSE:LSE), which has enjoyed a share price rise of 14% year-to-date. The LSE share price is now around £88 and its P/E is 74, which also makes it an expensive UK stock to buy. It posted positive interim results to the end of June and increased its dividend to 23.3p, giving a yield of 0.26% and earnings per share are £1.19. It is attempting to take over financial data analytics firm Refinitiv, but is up against an in-depth anti-trust investigation by the European commission. I think the positive sentiment originally surrounding this deal, along with economic uncertainty, pushed investors to see the London Stock Exchange as a safe haven. Unfortunately, the Refinitiv deal is under a cloud and to get approval may require selling assets, reducing the value of the company. This puts its share price at risk of a sharp decline.  

Shares in AstraZeneca are trading around £83, up 8% year-to-date. This pharma giant has one of the highest P/Es around at 94. It is developing a Covid-19 vaccine with Oxford University, which you would think might boost its share price. However, it is unlikely to profit much from this deal as those developing vaccines have promised to keep prices low. Yet AstraZeneca also makes a wide range of reputable medicines, including cancer treatments, which I think will stand it in good stead going forward. Earnings per share are 78p and its dividend yield is 0.82%.

These are very expensive UK stocks, so would I buy any of them this month? Well, I would consider all of them in a dip. But to invest money to get good returns, I would follow a value investing strategy, which just is not possible with such high-priced stocks.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kirsteen has no position in any of the shares mentioned. 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.

More on Investing Articles

Young black man looking at phone while on the London Overground
Value Shares

After a 16% drop, FTSE 100 stock JD Sports Fashion looks like a steal to me

This FTSE 100 stock has tanked since mid-September. Edward Sheldon believes that there's value on offer after the share price…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Is now the time to buy BP shares? Here’s what the charts say

The best time to buy shares in a company is when they’re trading at a discount. But the future is…

Read more »

Investing Articles

Here’s how I’d use £50K to aim for a million when the stock market crashes

Seeing a stock market crash as a buying opportunity could prove lucrative for a well-prepared, long-term investor. Christopher Ruane explains…

Read more »

Stack of one pound coins falling over
Investing Articles

It’s up 27% with a P/E of 9! I’m considering the potential of this blossoming penny stock

Despite several years of losses, this UK penny stock has an impressive valuation. I’m looking to see if it could…

Read more »

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »