If I had to choose some shares for my FTSE best stocks to buy now list, I definitely include Playtech (LSE:PTEC).
FTSE 250 Gaming giant
I believe Playtech is not a typical online gaming firm as it has grown to become one of the largest online gaming software suppliers in the world. In turn, it creates and delivers platforms for approximately 140 betting firms across 19 countries. Some of its licence agreements are with well-known names such as William Hill, Ladbrokes, and Warner Bros. PTEC has also grown rapidly through strategic acquisitions to diversify its offering.
Share price and recent performance
At its current price, I believe PTEC is one of my best stocks to buy now. In January 2020, before Covid-19 affected worldwide markets, PTEC was trading at close to 400p per share. At the height of the crash, its share price tumbled to just 140p. But as I write this, the shares are trading at 431p each. That’s expensive for recent years. But it had been much higher pre-2018 and I believe at its current price point, it’s a dirt-cheap stock based on its record and potential.
Full-year results announced last week made for interesting reading. Covid-19 affected PTEC negatively, but there were some positive takeaways too, in my opinion. Business-to-business performance was the main factor causing group-wide revenues to drop sharply. The cancellation of sporting events impacted profitability too. A 10.6% decline in B2B revenue weighed on the company as a whole and contributed to a group-wide 25% decline in revenues to €1.07bn for the year.
On a more positive note, PTEC’s digital segment grew a very healthy 30%. This was driven by its casino, live casino bingo and online poker businesses, which have thrived during the pandemic.
Despite the impact of Covid-19 on Playtech’s results for 2020, PTEC is on my best stocks to buy now list due to its track record and standing within a multi-billion dollar industry. I believe that when its next trading update is released, it will show a return to previous profitability and growth.
One of my FTSE best stocks to buy now
As with any stock, there are risks. PTEC is in a heavily regulated industry, which could affect operations and profitability. Furthermore, we are still in a pandemic. This means cancelled sporting events and less B2B exposure that could continue to affect PTEC for some time too.
Aside from the risks, I believe there is a lot to like about Playtech. It has a favourable track record for growth, profitability, and acquisitions over many years. In 2021 it is expected to record a near 70% improvement in annual earnings, which I believe could be great news for investors. At the end of October, insiders were buying the shares, which also fills me with confidence. If those running the company invest their money, surely they have confidence in its viability.
Internet betting has become a key activity in recent times and PTEC has been well positioned to ride the wave and to benefit. It is believed that the size of the global gaming market will be worth close to $100bn in just three years’ time. That would be close to a 40% increase compared to now. PTEC is well positioned to capitalise on this growth. Looking at my best stocks to buy now list, here are two of my other top picks I like right now.
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Jabran Khan has no position in any of the shares mentioned. 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.