Wednesday newspaper share tips: Games Workshop, PZ Cussons

Investors looking for a haven from sterling's post-Brexit vote nadirs could do worse than Games Workshop, which The Telegraph's Questor columns suggests as a potential 'Buy'.

It said the "cheep and cheerful" outfit might have been overlooked by the market, noting revenues had recovered at the tabletop games maker since end-2015.

"Couple with strong cash generation and healthy overseas sales, Games Workshop is an enticing, if risky play," asserted the column.

The outfit has pumped out figurines to a loyal customer base since the 1970s, and yet still received scant analyst coverage in the austere halls of the City.

Games Workshop accrued about 72% of its sales overseas, and had a domestically focused cost base.

"A weaker pound could boost profits beyond the expectation-busting £16.9m achieved in the year to May 29," wrote Questor.

"The company appears to be making good progress in selling its intellectual property to video-game developers, boosting royalty income from £1.5m to £5.9m in its most recent results."

The column noted that this revenue stream would inevitably involve a certain amount of lumpiness, ultimately leading to volatility in share price.

It further added that Games Workshop was wrestling with a secular threat -- it was reliant on a generation of loyalists who, as they have matured, have been able to absorb increasing prices forever.

"They will not be around forever," Questor said.

Thus, Games Workshop's challenge was to recruit a new wave of younger, less affluent customers going forward.

"To overcome these hurdles, management must be careful not to get stuck in a fantasy world of their own," wrote the column, adding it believed the shares possessed upside potential.

Meantime, the Financial Times' Lex column contended that longer term volatility surrounding Nigeria's just-floated currency, the naira, should suit soap-maker PZ Cussons.

The outfit started back in 1879 as a Sierra Leone trading post, which meant it knew a thing or two about riding through good times, and bad.

But, the UK-based company still collected about two-fifths of its sales from Nigeria, which meant shifting product along rough roads to open-air markets.

Nigeria's currency floated in June against the US dollar -- it was previously pegged -- and promptly dived by about half, which dented PZ Cussons' profits.

"The company has seen such volatility before," lathered Lex.

"It reacted by massaging prises up slowly, prioritising higher-value products form scarce imported materials," the column noted.

The maker of Imperial Leather soap also kept an eye firmly on the main prize at stake -- Africa's burgeoning population and its reliable demand for consumer products.

Lex noted that floating a currency ultimately lessened the risk of shortages, in exchange for a little more price volatility.

"Long term, that suits Nigeria and PZ Cussons."