FTSE AIM incumbent
Team17 is a British video games developer with a unique approach. It creates many premium games that are well known, but also partners with independent developers who are new to the market. Currently, Team17 has over 90 games in its portfolio.
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As I write, shares in Team 17 are trading for 756p per share. At the same time last year, shares were trading for 694p per share which means shares have increased by 8% since. Looking at pre-crash levels, Team17’s share price has increased by nearly 60% from 474p per share on February 1 2020 to current levels.
Some of the best stocks to buy now I have identified have surpassed pre-crash levels. They have benefited from the pandemic and restrictions. I believe people looked for new pastimes such as gaming when other social and sporting events were unavailable or cancelled.
Why I like Team17
I believe Team17 is a great FTSE growth option for my portfolio. I have pinpointed two reasons as to why I am a fan.
- Growth market. It has been reported that the gaming industry grew by around 10% year on year in 2020. As I mentioned, Covid-19 lockdowns led to consumers looking for alternative entertainment. Furthermore, I believe this growth will continue, especially in mobile gaming. Global consultancy firm Accenture reported that the gaming industry has increased by half a billion players in the past three years, totalling 2.7bn people across the world. In addition, it is predicted more than 400m new gamer’s are expected by the end of 2023. Most of my best stocks to buy now are in rapidly expanding growth markets. Team17 should benefit from this continued growth in gaming.
- Consistent performer. Team 17 has performed consistently well for a number of years now. I understand past performance is not a guarantee of the future but it is a good gauge for me nevertheless. Revenue and gross profit have increased year on year for the past four years. In the same time period, operating and net income have also increased. With solid performance and a robust balance sheet, I foresee further positive performance, which means potential returns for me if I were to invest.
The best stocks to buy now have risks too
Team17 is currently trading close to all-time highs and has a price-to-earnings ratio of over 45. This means if it were to experience any issues, for example a negative reaction to a game launch or market conditions were to change, its share price could drop significantly. I must note, many tech stocks experiencing growth often have a high P/E ratio as the growth can often be priced in already.
In addition to this, Team17 is in a very competitive market. There are growing numbers of gamers, but there are many gaming and tech firms looking to gain market share with the next big thing. This could affect Team17 and its investment viability too.
Overall, I would be happy to buy Team17 shares at current levels for my portfolio. I believe it will continue its growth trajectory and could provide a good return in the future too.