I’d invest £1,000 in this high growth stock

This AIM-listed stock has seen great growth over the past year and chances are that it can continue to look good.

| 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.

sdf

Since I last wrote about Team17 in mid-March, the stock has jumped 11%. Over the past year its share price is up 30%. The AIM-listed video game developer, continues to look like a good stock to buy based on this. But is its story as strong as it looked last year? In this article I try and find out. 

Encouraging update from Team17

Because of its robust past performance, I was looking forward to its trading update for the six months ending 30 June, which was released a few days ago. In 2020, Team17 showed a strong 34% revenue growth. But the update does not say much except that it enters the second-half of the year “in great shape”

While this is encouraging, I would have really liked some more detail. The video games industry may not grow at the pace it saw last year, when we had limited options for entertainment in the outside world. I was interested in knowing how its story has evolved since restrictions started easing. 

Should you invest £1,000 in Team17 Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Team17 Group Plc made the list?

See the 6 stocks

This is even more significant in light of a recent report saying that the industry could actually shrink this year. This is partly because 2020’s numbers are tough to beat. But also because of other reasons, like chip shortages. And there is greater competition among entertainment options now as the lockdowns have ended. 

Expanding its market

For now though, we have to wait until September, when Team17 releases its results to know more. It would also be good to know more about its recent acquisition. Last month, it said that it was acquiring Ireland-based StoryToys, which develops educational apps for children. The company is expected to help it grow its audience and tap into a market it believes has accelerated during the pandemic. Since it is profitable, Team17 also says it will be “immediately earnings accretive”

Early last year, it had also acquired Yippee Entertainment, a software developer and digital games publisher. I think these are good signs for the company’s future growth, provided that these acquisitions turn out well. These can have a bearing on its share price too. 

Would I buy Team17 shares?

At present, this growth stock’s price is fairly elevated. Its price-to-earnings (P/E) is 49 times. While its past growth, its latest update, and the long-term future of the industry can justify it, it remains to be seen whether it sustains the strong numbers from last year. 

If it does not, it is likely that its share price could decline from here. This is especially so now, when a lot of other companies’ performance is picking up as the effects of reopening are felt on the economy. In any case, its share price does have a tendency to fluctuate, though overtime it has been on an upward trajectory. 

On the whole though, I think the Team17 share remains a good growth stock for me to buy with £1,000 at hand, though I would prefer to buy it at a more competitive price. 

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Manika Premsingh 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

Finger clicking a button marked 'Buy' on a keyboard
Investing Articles

Analysts have upgraded this FTSE 100 stock to Buy. What should investors do?

Associated British Foods shares have been uninspiring for some time. But is it finally time to consider buying the FTSE…

Read more »

Man changing battery on electric bicycle
Investing Articles

Prediction: in 12 months the sizzling National Grid share price could turn £10,000 into…

It's been another solid year for the National Grid share price and the dividend yield is decent too. So why…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

Up 185% in 3 years, why does the market love this FTSE 250 stock

Over the past three years, this stock has vastly outperformed the FTSE 250. Dr James Fox takes a closer look…

Read more »

A handsome mature bald bearded black man in a sunglasses and a fashionable blue or teal costume with a tie is standing in front of a wall made of striped wooden timbers and fastening a suit button
Investing Articles

Looking for growth, dividends, or value? These 3 ETFs could be smart ideas to consider

Exchange-traded funds (ETFs) provide a way for investors to spread risk without sacrificing the possibility of huge long-term returns.

Read more »

Happy couple showing relief at news
Investing Articles

Is the Rolls-Royce share price fast becoming a joke?

The FTSE 100 engineering titan has done brilliantly in recent years. But our writer wonders whether the Rolls-Royce share price…

Read more »

Middle-aged white male courier delivering boxes to young black lady
Investing Articles

Is there a ‘best age’ to start buying shares?

Christopher Ruane weighs some possible pros and cons of waiting to start buying shares for the first time, versus starting…

Read more »

piggy bank, searching with binoculars
Investing Articles

Is it time to look again at the FTSE 250’s worst performers?

Our writer considers the prospects for two of the worst-performing shares on the FTSE 250, with falls of at least…

Read more »

A handsome mature bald bearded black man in a sunglasses and a fashionable blue or teal costume with a tie is standing in front of a wall made of striped wooden timbers and fastening a suit button
Investing For Beginners

Down over 40% in the past year, I think investors should consider these value shares

Jon Smith points out two value shares that have fallen heavily over the past year but are starting to look…

Read more »