Even while being more volatile, the FTSE 250 has outperformed the FTSE 100 over the last six months. The UK’s flagship growth index has rewarded patient investors with a 15% bounceback since last October. And with interest rates set to be cut later in 2024, this upward trajectory could continue.

Despite this positive momentum, plenty of UK stocks within the index are trading at a relatively cheap-looking valuation. And looking at own portfolio, there are several which are looking like good buys right now. Among my top picks, Games Workshop‘s (LSE:GAW) one position I’m keen to buy more of.

Plastic is the new gold

When it comes to tabletop wargaming, Games Workshop wears the crown. Its various games set in the Warhammer and Warhammer 40,000 universes are the most popular globally. There are millions of players, collectors and hobbyists regularly buying new plastic miniatures to expand existing armies, or build new ones.

On the surface, it doesn’t sound that lucrative. But the addictive nature of the hobby paired with immense lore developed over decades has granted the company enormous pricing power.

A small army can easily set someone back £100. And when scaled internationally, Games Workshop’s revenues have been growing at a remarkable 17% annualised rate over the last five years. Meanwhile, thanks to margin expansion, the bottom line’s growing even faster. In fact, the company’s latest results are the best since it was founded in 1975. And that was during a cost-of-living crisis!

Can the growth continue?

In December 2023, the FTSE 250 stock took a bit of a nosedive after announcing trading activity had slowed compared to the previous summer. Seeing such volatility from a growth stock isn’t exactly a major surprise. Neither should have been the announcement.

Summer saw the launch of the new Leviathan box set, which marked the launch of Warhammer 40,000 10th edition. It proved enormously popular creating some fairly tough comparisons for other trading periods which didn’t have such a big product launch.

Since then, the shares have recovered slightly. But today’s market capitalisation doesn’t appear to reflect the seemingly massive success of the Christmas Battleforce boxsets, the new army box sets for the 10th edition, and the launch of Warhammer: The Old World – most of which sold out online within days of release.

Risk and reward

With a long pipeline of new miniatures and books throughout 2024, Games Workshop looks primed to continue growing rapidly. Of course, that’s only if demand holds up.

With the UK officially in a recession, the pressure on consumer wallets is seemingly intensifying. At least, that appears to be the case for a large number of households. As such, even if players are desperate to get their hands on the latest miniatures, they may have to postpone purchases.

In this scenario, the firm’s sales volumes would likely suffer. And with investors still on edge about the general macroeconomic environment, that could send Games Workshop shares further in the wrong direction. And even with the group’s impressive pricing and brand power, the stock still carries considerable risk.

Nevertheless, I don’t foresee the company’s long-term strategy being compromised any time soon. And once the economic landscape improves, the group’s market capitalisation could grow even higher. That’s why I plan on adding more shares to my portfolio this month.