The FTSE 100 sports betting and gaming stock Flutter Entertainment (LSE:FLTR) caught my attention earlier this week. It showed a single-day gain of over 8%. As a result, it was the biggest FTSE 100 gainer on the day. But that’s just one feather in its cap. The Flutter Entertainment share price has more than doubled since the stock market crash. It’s in the league of other FTSE 100 high-performers like Scottish Mortgage Investment Trust, AstraZeneca, and Ocado. All these stocks’ prices are currently at or around all-time highs.
They had great credentials even before the market crash. But our new normal has catapulted them to dizzying heights. I’d like to know if this high can be sustained, though, before I think about investing.
Positives for the Flutter Entertainment share price
FLTR’s first-half reports are indeed strong, suggesting a case for bullishness. Its revenue jumped 49% from the year before and its adjusted earnings were up 59%. Its outlook was weak because lockdowns impacted sports events. However, home entertainment services like poker and gaming products saw rising demand.
I reckon this is at least partly driving city analysts’ optimism for the stock. According to a MarketWatch report, the sharp increase in FLTR’s share price on Thursday was because of positive outlook from both Bank of America and Barclays. Its results are due in a few days that will confirm this or not. In any case, the company has shown healthy growth over the past few years. This is supported by growth in the gambling industry. Online gambling is now easier than ever before with rising usage of smartphones, faster Internet speeds, and its greater penetration.
The rising risk from ethical investments
I think it’s a stock with a bright future, even with the current risks of coronavirus derailing sports betting and hence part of its revenue stream. In the longer run, its big risk will be from the rise of ethical investments, which excludes gambling along with industries like alcohol, tobacco, fossil fuels, and those that violate basic human rights among others.
From this perspective, I’d encourage considering a FTSE 100 stock like Scottish Mortgage Investment Trust, whose performance in 2020 is similarly impressive. And it’s biggest investment is in Tesla, which among other things, is the name best known for electric vehicles (EVs). EV stocks align well with ethical investments. They generate fewer emissions and can be powered up with clean energy. Its other big investments pass the test too. I’m talking about high-growth e-tailers like Amazon and Alibaba.
Closer to home, Ocado is an online grocer, with share price performance matching that of Flutter Entertainment. Even better is AstraZeneca, whose share price increase has been subdued in the past weeks, but has seen meteoric growth in recent years. And it’s also developing a Covid-19 drug. I’d consider these alternative investments, that are competition for the Flutter Entertainment share price.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Manika Premsingh owns shares of AstraZeneca and Ocado Group. The Motley Fool UK owns shares of and has recommended Alibaba Group Holding Ltd., Amazon, and Tesla. The Motley Fool UK owns shares of Flutter Entertainment and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. 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.