1 FTSE 100 stock I’d lay £5k on right now

Flutter Entertainment plc (LON: FLTR) is a stock I’m very excited about in late 2019 after it has gained even more access to the young US sports betting market.

| 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.

On May 14 2018, the United States Supreme Court struck down a 1992 federal law that effectively banned commercial sports betting in most states. This landmark decision kicked off a rush that has seen the world’s top gaming companies vie for market share in one of the largest betting markets in the world. Many states are still in the process of pushing through legislation to legalise sports betting.

We are left with rough estimates as to market size with the market driven underground in the US for so long. Some early figures suggest that illegal sports wagers placed in the US reach around $150bn annually. Gambling Compliance, a London and Washington-based provider of business intelligence into the gambling industry, projected that the US market for lawful sports wagering would grow to $5.7bn in annual revenue by 2024. It also forecast that, by this time, legal sports betting will have spread to 34 states.

Flutter is making big moves in the US

Why is this relevant for investors in the UK? Dublin-based Flutter Entertainment (LSE: FLTR) struck a deal in October that will see it grow into the world’s largest online gaming operator. Stars Group agreed to a roughly US$6bn all-stock takeover. Flutter will own approximately 54.64% of the combined company and Stars Group shareholders will own about 45.36%. The deal is expected to be approved by the second quarter of 2020.

Flutter had been pushing towards a US expansion in the face of toughening EU regulations. Last year Flutter obtained the New York-based fantasy sports site FanDuel, which reported nearly $96m in year-to-date revenue in the state of New Jersey as at September 30.

Stars Group has already established a strong presence in the US. Its partnership with Fox Sports resulted in the launch of Fox Bet in the late summer. Earlier this month, Fox Bet announced a multi-year deal with Major League Baseball (MLB) that will make the mobile sports betting platform an ‘Authorized Gaming Operator’ for the MLB.

If the deal closes by the second or third quarter in 2020, Flutter will find itself in possession of two of the strongest brands in the US market. Online takings are dominating early sports gambling revenues in the states of New Jersey and Pennsylvania, with FanDuel standing out as a big winner. The pace of legislative action will keep this market from achieving its full potential until we are late into the next decade, but results in early states show that the wait will be worth it for gaming operators.

Why I’m snapping up Flutter in the fall

Shares of Flutter have climbed 21.6% year-on-year as of morning trading on October 23. I want to take a brief look at Flutter’s Relative Strength Index (RSI), which aims to chart the historical weakness or strength of a stock based on the closing prices of the most recent trading period. An RSI above 70 indicates that a stock is technically overbought, whereas an RSI below 30 indicates that it is technically oversold. Shares of Flutter spiked into technically overbought territory after this deal was announced, but the stock has since retreated to neutral levels with an RSI below 60.

Flutter stock does possess a price-to-earnings ratio of 31 at the time of this writing, but I’m willing to pay the premium to bet on Flutter’s growth after it has gained even more access to this explosive market.

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.

Ambrose has no position in any of the shares mentioned. The Motley Fool UK owns shares of Paddy Power Betfair. 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

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »