Could this FTSE 250 stock be a good buy for my portfolio?

Jabran Khan delves deeper into a FTSE 250 gaming stock and decides whether or not he would add shares to his portfolio after some recent positive activity.

| 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.

Could FTSE 250 incumbent 888 Holdings (LSE:888) be worth investing in for my portfolio? Let’s take a look to see if I should buy shares.

FTSE 250 gaming giant

888 Holdings is one of the world’s largest online betting and gaming firms. It operates via two channels. The first is B2C, which includes its own brands such as 888 Sport, 888 Poker, and 888Bingo to name a few. These platforms offer the public the opportunity to play casino games and place bets on sporting events. The second channel is the B2B aspect of the firm. This is where it produces proprietary technology for partners to use through its Dragonfish brand.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

As I write, shares are trading for 360p. A year ago, shares were trading for 252p, which is an impressive return of 42%. Shares in 888 are currently trading close to all-time highs and have surpassed pre-crash levels of close to 140p by some distance.

The pandemic left many people looking for new pastimes and habits. Online gaming was one thing many turned to which benefited firms like 888. So should I look to add shares in this burgeoning firm?

For and against

FOR: 888 has a good historic track record of performance. I understand historic performance is not a guarantee of the future but I use it as a gauge when reviewing investment viability. I can see revenue has increased year on year for the past three years and gross profit for the past two years. The FTSE 250 incumbent’s Q3 trading was excellent too, looking at more recent information. Revenue rose by 7% compared to the same period last year. Year-to-date revenue stands 28% higher compared to year-to-date levels in 2020.

AGAINST: The issue with online gaming and betting is the ever-looming threat of tighter and increased regulation. In fact, 888 has been affected by this in the past. Dutch authorities introduced new regulation that required a betting license. 888 decided to remove itself from the Dutch market but will look to relaunch. This is an ongoing threat that can affect firms like 888.

FOR: One thing I really like about 888 is the fact it is growing rapidly. It does this organically and through acquisitions. For example, in its Q3 update, it confirmed the acquisition of William Hill International. It also launched a new brand in Colorado and 888sport in Germany. All of this activity is exciting and shows growth plans and ambition. This growth could result in increased shareholder returns in the future.

AGAINST: 888 shares are trading close to all-time highs. In fact, they have never come close to recent levels. This is a bit of a worry for a potential investor. Any negative news or downturn in earnings, that could occur if pent up demand and new users fade away post-pandemic, could hurt the share price and any potential returns.

My verdict

Right now I would be willing to add 888 shares to my portfolio. I am excited by its growth trajectory and the fact the market seems to be growing overall and has a robust balance sheet to support it. New customers since the pandemic have benefitted 888 and I believe this new wave of users is here to stay.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

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.

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 considered, so you should consider taking independent financial advice.

More on Investing Articles

Risk reward ratio / risk management concept
Investing Articles

A top penny stock to buy in July

Penny stocks can carry higher risk for investors than larger companies. However, here is one low-cost UK share I think…

Read more »

Business development to success and FTSE 100 250 350 growth concept.
Investing Articles

Why 2022 could turn out a great year for buying growth shares

The appetite for growth shares appears to have waned in 2022, as the US Nasdaq has hit a bear market.…

Read more »

Piggy bank group pastel color background
Investing Articles

Should I buy PayPal stock in July?

The PayPal share price has fallen quite a long way from its all-time high. So, could July present a buying…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

2 great FTSE 100 stocks to own heading into a recession

Jabran Khan identifies two FTSE 100 stocks he feels are recession-proof and details their defensive capabilities.

Read more »

Young black woman in a wheelchair working online from home
Investing Articles

The Lloyds share price is down. Where will it go next?

In this article, this Fool looks at where the Lloyds share price could be heading, and whether it can return…

Read more »

positive mental health woman
Investing Articles

Waiting for a stock market recovery? I’m not

I'm not in a hurry for a stock market recovery. In fact, I think market volatility can be good for…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

My Stocks and Shares ISA has tanked this year! Here’s what I’m doing

As a long-term investor, I shouldn't be too bothered by short-term losses in my Stocks & Shares ISA. But it's…

Read more »

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet
Investing Articles

3 great dividend stocks to buy in July

Right now, many investors are turning to dividend stocks for protection. Here, Ed Sheldon highlights three shares he'd buy in…

Read more »