I’d buy Games Workshop shares before they hit the FTSE 100!

Games workshop (LSE: GAW) shares are up more than 40% in the past six months.

The FTSE250 manufacturer of miniature wargames has gone from strength to strength and has grown in size market value to £4.5 billion, which, according to the latest data I have, makes it the 89th largest company of those eligible for the FTSE 100.

If nothing changes, the company looks like a dead end for Britain’s main index.

IP strength

While a seat at the table with the big boys won’t affect things too much – apart from a dose of prestige and a possible share price surge as the Footsie index funds pile into the stock – it’s a sign of how good the company has achieved in recent years. recent times. If I didn’t already have a position in the company, I would buy shares of the brand owner Warhammer today. This is why.

The main reason is the strength of the company’s intellectual property, or “IP.” A good IP address creates serious loyalty and gets customers to open their wallets for all kinds of products.

The Lion King remake was one of the highest-grossing films ever made. Was it because people wanted to go to the cinema to see a story about expressionless CGI lions? No! It was the IP address! They had fond memories of the first movie and happily spent money to see Simba and the gang again.

Evidence of the power of Warhammer IP comes through the video game world. For those who don’t know, the gaming industry is in something of a crisis. Formerly revered AAA development studios release flop after flop. Just to count this year’s notable failures would require the fingers of both hands.

Amid the commotion, a little game called Warhammer 40,000: Space Marine 2 and it sold like hotcakes. In just a few months, 4.5 million copies flew off the proverbial shelves. One insider claimed it sold faster than any other Fate or Earthquake games.

Big impact

The impact for Games Workshop is that the company expects to triple its licensing fees from £13 million to £30 million this year. That’s a handy addition to the company’s total turnover of £260m, and don’t forget that licensing IP is a very high-margin business.

A sequel to the game probably won’t be far away either, but the real benefit is the brand awareness. How many kids will ask mom and dad for a Warhammer set for Christmas after playing this new cool computer game? Quite a few I would guess.

Is this a risk-free investment? Of course not. There is no stock. And one of my bigger concerns is that the company’s emphasis on British manufacturing means that expensive products will leave it exposed as cost of living problems worsen.

But overall, I think this is a stock investors should consider. Next year the company will celebrate its 50th anniversary and I wouldn’t be surprised if the strength of the brand and the company continues for another 50 years.