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Forget risky shares like SXX! I’d buy this 4.3%-yielding value and growth stock

Long-suffering shareholders in Sirius Mineral look like they will be saved from a total loss of their investments by the takeover offer on the table from Anglo American. But I think the whole sorry saga is a stark reminder of the risks we take on when flirting with high-risk/potential-high-reward shares.

Generally, such beasts have a great ‘story’ but nothing much to show in terms of revenue and profits now. Classic ‘jam tomorrow’ propositions, if you will. But I think there’s a better way to aim for riches from shares – ‘jam today’ companies with revenue, earnings and cash flow growth now, such as the company below.

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Value and growth

When I look at the numbers for Ten Entertainment (LSE: TEG) the value jumps off the screen at me. With the share price close to 314p, the forward-looking dividend yield for the ten-pin bowling operator is around 4.3% for 2020, with the anticipated earnings multiple at 13.5.

Shareholders have already seen the stock shoot up by around 30% since last autumn, but City analysts’ estimates are robust. They expect both earnings and the dividend to increase by percentages in the mid-to-high teens next year.

Meanwhile, the balance sheet looks strong with modest borrowings, and the shares have been breaking out from a long period of consolidation that started at the beginning of 2018. I think that kind of price action suggests favourable sentiment in the investing community.

I’m encouraged by today’s full-year trading update, which leads with the headline, “Another year of significant profitable growth.” Like-for-like sales increased by 8% in 2019 compared to the prior year and sales from new centres came in 2.2% higher, giving an overall increase in sales of 10.2% — the eighth consecutive year of growth for TEG.

The company made two acquisitions in the period and recorded the first full-year effect of four acquisitions and one closure completed during 2018. Indeed, growth has been both organic and acquisitive. Now the firm claims to be the second-largest ten-pin bowling operator in the UK market with 45 sites and around 1,100 bowling lanes.

Maximising revenue

On top of that, revenue is enhanced with other entertainment offerings, such as amusement machines, table-tennis, soft play, escape rooms, laser games and pool tables, plus food and beverages. It’s an age-old strategy, I reckon, involving the squeezing of the maximum spend from every customer that crosses the threshold.

The firm has been busy with its investment programme, refurbishing four sites during the year, “including one prime location that has received additional investment as a concept site format to trial new entertainment experiences.”  And in the first half of 2020, the first new-build site should open, called Manchester Printworks.

Looking ahead, the company plans to develop its pipeline of site opportunities with new developments and acquisitions. The outlook is positive, trading is robust and the company is expanding. I wouldn’t touch the shares with a bargepole if I believed there was a general economic slump coming soon, but right now, I’m sorely tempted!

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK 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.