Best stocks to buy now: I believe this FTSE gaming giant is a dirt-cheap buy right now

Jabran Khan picks this FTSE 250 gaming giant as one of the top shares for 2021 from his best stocks to buy now list after some mixed FY results.

| 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.

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. 

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.

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.

More on Investing Articles

Investing Articles

A 9.6% yield but down 14%! Should I consider this FTSE gem for my dividend portfolio?

There are several things to consider when looking for FTSE shares with dividend potential. Here, our writer outlines his evaluation…

Read more »

Young Asian man shopping in a supermarket
Investing Articles

I’d shun Lloyds Banking Group and consider this stock for passive income instead

This company's dividend record knocks spots off Lloyds Banking Group's, and it looks like decent value now with a yield…

Read more »

Investing Articles

Will the 5.6% BT Group dividend yield grow in 2024?

Zaven Boyrazian explores whether BT Group can continue hiking its dividend and if the telecoms giant belongs in his income…

Read more »

Investing Articles

FTSE 100’s near a 52-week high, but this stock’s still dirt cheap!

The FTSE 100's on the rise, but not all stocks have been so fortunate. Here’s one company that got left…

Read more »

Investing Articles

Is this ‘secret weapon’ a multi-billion pound reason to buy Lloyds shares?

Dr James Fox explains how Lloyds shares could rise even higher as the bank's 'strategic hedge' is likely to boost…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

3 of the best penny stocks for growth, dividends, and value!

Looking for top penny stocks to buy? Royston Wild believes these UK small-cap shares could prove lucrative investments in the…

Read more »

Investing Articles

How I’d aim to turn an empty ISA into £275k by purchasing cheap shares this summer

Harvey Jones is taking advantage of the summer stock market lull to buy cheap shares and build a high and…

Read more »

Investing Articles

What’s the minimum I need to invest every month to earn a meaningful passive income?

When looking to secure a stream of passive income it's important to be realistic. Our writer investigates a strategy to…

Read more »