January was a rocky start for many shares, including some that I consider the best to buy. But while the market may be having a tantrum, it’s created what appears to be an excellent buying opportunity for my portfolio. Let’s explore two of my top picks that I’m tempted to buy this month.
The talent behind AAA video games
Keywords Studios (LSE:KWS) isn’t the best-known game development studio. Yet it has its hand in most of the big-budget titles released each year. The company provides talent services to larger studios, working on franchises, including Microsoft‘s Halo and Activision Blizzard‘s Call of Duty.
Despite delivering record-breaking growth in 2021, shares of Keywords Studios are actually down by around 5% over the last 12 months. The full-year results are scheduled to be released at the end of March. But looking at the latest trading update, revenue and profits for 2021 are expected to come in at €512m (£425m) and €86m (£71m), respectively.
By comparison, those figures are 37%% and 300% higher than in 2020. And since the pandemic only drove up demand for the group’s services, these figures are significantly ahead of 2019 levels as well.
This is by no means a risk-free investment. Management does have quite an aggressive, acquisitive growth strategy that could cause problems in the long term if acquired studios fail to meet performance expectations. But given the results achieved so far, I feel this is a risk worth taking. And with the shares currently down, now could be the best time to buy for my portfolio.
Are these the best shares to buy right now?
Unlike Keywords Studios, Judges Scientific (LSE:JDG) has had a fairly decent run of late. Over the last 12 months, the speciality scientific equipment developer has watched its shares climb by over 20%. But that would have been higher if it weren’t for the recent sell-off.
Last month, CEO David Cicurel sold a whopping £3.2m worth of shares in this business. And unsurprisingly, investors freaked out, sending the stock into a double-digit decline. But I think the market may have overreacted here. Even after this sale, Cicurel still owns over 10% of the shares outstanding.
To me, that signals his faith in this business remains strong. And looking at the latest trading update, it’s easy to see why. Organic order intake jumped 25.1% higher than a year ago and 8.5% higher than pre-pandemic levels, setting a new record. Consequently, management is now expecting earnings to come in higher than initially anticipated.
That certainly sounds promising to me. And it’s why I think these should be some of the best shares to buy right now. But even with the recent decline, I can’t deny the group does trade at a lofty valuation.
As it stands, the price-to-earnings ratio sits at a sizable 49. The group has historically carried a notable premium, but this does open the door to volatility like that seen last month. Yet I remain optimistic about this business’s future. So, despite this risk, I’m tempted to add some shares to my portfolio ahead of the earnings release in March.
Zaven Boyrazian owns Keywords Studios. The Motley Fool UK has recommended Judges Scientific and Keywords Studios. 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.
