If I were to list my top FTSE 100 stocks right now GVC Holdings (LSE:GVC) would definitely make the cut. GVC has seen its sales increase during the economic downturn caused by the Covid-19 pandemic.
GVC is one of the world’s largest sports-betting and gaming groups, with operations online and in the retail sector. It operates in more than 20 countries with approximately 24,000 employees. GVC’s brands include bwin, Coral, Ladbrokes, Gala, and Foxy Bingo to name a few. It also provides third-party services to customers on a B2B basis.
FTSE 100 champion
GVC has grown tremendously over the past decade or so. It has strategically acquired many smaller contemporaries across Europe and beyond. Acquisitions show me a business is thriving, progressing, and ultimately has the ambition to grow.
When the market crash occurred, GVC lost approximately 65% of its share price value. In mid-February, shares were trading for 930p per share. Fast-forward a month and GVC was a FTSE 100 bargain with shares trading at 325p per share.
At the time of writing, GVC’s share price has made an excellent recovery and shares are trading for over 1,000p per share. This has surpassed pre-crash levels. Based on its current price, shares are trading at a PEG ratio of just 0.5. In my opinion this means the stock offers a healthy margin of safety.
Recent performance
GVC released a Q3 trading update earlier in October that showed positive results despite the economic downturn. Group gaming revenue rose by 12%. Online activity rose by 26%, which would have offset the slight decline in the UK retail market which fell by 5%. EU retail actually rose but by a marginal 2%. This was the 19th consecutive quarter of double-digit growth for GVC. Not many FTSE 100 firms can claim they have achieved such a feat. In addition to this, it reported market share gains in all major territories too.
GVC has recently entered the US market with a new venture and I believe this could be key to further growth. In the update, GVC confirmed that it had now gone live in eight states and US revenue is expected to surpass initial expectations. It also announced another acquisition in the form of a major online gambling operator in Portugal that will further enhance its market share. Despite the pandemic affecting its retail business, GVC confirmed that all of its retail outlets were now open and volumes were within 10% of pre-Covid-19 levels.
Growth to continue?
One of the key questions that GVC may face is whether it can keep up its rapid growth. I honestly believe it can. Some may consider its current price slightly expensive, however, I believe GVC is a still great opportunity right now at its current price.
One of my Foolish colleagues wrote about GVC a few months ago. He noted how GVC’s stock has produced an average annual return of 27.2% for investors over the past decade, which is seriously impressive. If you compare this to the FTSE 100 as a whole, the average total return is 5.8% across the same period. This provides some perspective as to how well this once small start up has done and how it has grown into one of the largest gaming brands across the world.
