A logical share price fall

I’m talking about Playtech (LSE:PTEC). It’s the stock that’s fallen the most over the past year that remains in the FTSE 250. The share price is down a staggering 63% in this period, but not all is as it appears.

Playtech’s a tech company serving the global gambling and gaming industry. It makes money from software licensing and platform fees, as well as earning fees from the gaming revenue generated from the operators’ platforms.

The bulk of the share price drop came in mid-2025, when Playtech paid a £1.5bn special dividend to shareholders. This came after selling the Snaitech brand to a competitor, which equated to roughly two-thirds of the company’s market value. On the ex-dividend date, the share price dropped by the dividend amount, so the stock mechanically slid by around 60% that day alone.

This means that even though the stock’s fallen, anyone who invested in the company over the past year would have banked the dividend. So in theory, they wouldn’t be financially down overall. But it raises the question of whether the stock’s undervalued now that it’s predominantly focusing on its B2B operations.

The outlook for 2026

The interim results from September showed that revenue across the US and Canada increased 64% versus the same time last year. This is clearly a growth market for the company, and an area where online gambling markets are expanding rapidly with more friendly state approvals.

After the divestment of Snaitech, the company has a much stronger balance sheet. With debt reduced and cash in the business, it means the company has the fuel to invest in new projects.

On the other hand, there are risks. From the Autumn Budget, online gaming taxes are rising from 21% to 40%. This will directly impact Playtech negatively.

Furthermore, some people won’t consider investing in the stock for ethical reasons. I’m in this boat, and don’t like having gambling businesses in my portfolio.

Given the reason for the share price drop, I don’t think Playtech’s undervalued. With a price-to-earnings ratio of 16.26, I think it’s fairly valued for a FTSE 250 growth stock. Even though there are promising signs of expansion outside of the UK, I think it’s too early to tell if there’s enough value in the B2B division to materially grow the business in the coming years.

As a result, I think there are better value picks in the index for investors to consider.

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However, by getting in early, it’s sometimes possible to bag yourself a bit of a bargain.

Over the past 12 months, Playtech (LSE:PTEC) and the London Stock Exchange Group (LSE:LSEG) have seen their share prices fall 63% and 27% respectively. So what’s going on? Have two potentially lucrative buying opportunities emerged?

Not all that it seems

Playtech provides software and technology solutions to the gambling industry. But since January 2025, its share price has been the second-worst performer on the FTSE 250. However, most of the fall occurred in May, when the stock went ex-dividend. The group returned $5.73 a share to shareholders following the sale of one of its businesses.

But that’s not the full story. There’s another issue that resulted in its share price falling 22.5%, when details emerged in October of legal action being brought by Swedish rival Evolution. The lawsuit claims that Playtech hired a firm of private investigators to discredit the group. The British company describes the allegations as “wholly untrue”.

Citi says Playtech’s shares are undervalued, even after taking into account a potential adverse outcome from the legal action. The broker has a 355p price target, around 28% higher than today’s (23 January) share price. The consensus of analysts is 418p.

Another potential issue is that the sector doesn’t appeal to everyone, meaning there’s a smaller pool of potential buyers. The Gambling Commission reckons 1.4m people in the UK have, or are close to having, an unhealthy addiction to betting.

And in the November budget, taxes for some online bets were increased significantly. The group said there would be an impact on its EBITDA (earnings before interest, tax, depreciation, and amortisation) of “high-teens millions of euro”.

As mitigation, the group explains it has customers in many international markets. Having said that, others could copy the UK government’s example.

For those comfortable with the industry, I reckon the stock’s worth considering. It has an impressive track record of growth and a geographically diverse customer base in both regulated and unregulated betting markets.

A British institution

Despite its name, the London Stock Exchange Group’s about more than running the UK stock market. It also provides financial data, analytics, and risk management solutions to around 44,000 customers in over 170 countries.

One of its strengths is its impressive gross profit margin (86.8% in 2024) reflecting the specialised nature of its services and its less price-conscious blue-chip client base.

Admittedly, its shares aren’t cheap. But if it can deliver the 2027 earnings forecast of analysts, they’re not expensive by historical standards.

Obvious threats include a cyber security attack. And fears that artificial intelligence (AI) could damage its business are probably behind its 2025 share price drop. Rivals offering similar – but cheaper – alternative services could emerge.

But the group has huge amounts of data at its fingertips, which is the one thing that AI software needs in spades.

On balance, I still think the stock’s one to consider.

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But all’s not what it seems.

Although the company’s share price looks to have fallen off a cliff in May, this resulted from the payment of a special dividend of $5.73 a share following the sale of one of its businesses. But this is the only payout made in the past five years. Income investors will therefore probably need to look elsewhere for their next dividend cheque.

However, even though this year’s share price performance isn’t quite as alarming as it might appear at first, the company still has two big issues to deal with.

Double trouble

Firstly, it’s operating in an industry that’s being blamed for causing — what economists would describe as — negative externalities. In other words, social harms that remain uncompensated for.

According to the Gambling Commission’s most recent survey, 1.4m adults have (or are close to having) an addiction problem. That’s more than the population of Birmingham. Economic theory suggests that externalities of this kind should be taxed to offset the damage caused.

Whether Chancellor Rachel Reeves was applying lessons learned from her economics degree — or simply trying to fill a hole in the nation’s finances — we’ll never know, but her decision in the Budget to increase taxes on the industry is likely to adversely affect Playtech’s customers.

After she announced an increase in Remote Gaming Duty on online casinos and slots from 21% to 40% (April 2026), and an increase in the Remote Betting Rate on sports bets from 15% to 25% (April 2027), the group said there would be a “high-teens millions of euros before mitigation” impact on its 2026 adjusted EBITDA (earnings before interest, tax, depreciation and amortisation).

Nothing to see here

However, it also noted that its “geographic diversity” and “strong performance and prospects outside the UK” meant it was “comfortable” that it could still meet full-year expectations for 2026.

Of course, other governments around the world could follow suit. And there might be more pain to come from Reeves in future Budgets. But speculation concerning the death of the UK betting industry – if the Chancellor increased taxes and/or duties — appears to be wide of the mark.

The second issue that the group’s having to contend with is legal action from a Swedish rival. Evolution‘s alleging all sorts of skullduggery — which is denied by Playtech, described as “wholly untrue” – dating back to 2021. Ultimately, it looks as though the courts will determine the rights and wrongs.

My view

In my opinion, investors looking for capital growth could consider Playtech. It has a strong track record of raising its earnings. And it’s significantly reduced its debt in recent years.

But those taking a stake should be mindful of the risks. As well as the industry and legal challenges it faces, the sector in which it operates will probably be a no-go zone for ethical investors. This means the pool of potential buyers is likely to be smaller and could limit future share price growth.

However, on balance, those who are comfortable with the industry could consider adding the stock to their portfolios.

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Two of the most painful drops this year include Playtech (LSE:PTEC) and Ultimate Products (LSE:ULTP), with the latter even falling into penny stock territory.

These businesses have seen their share prices crash by 65% and 46% respectively since the start of the year. Yet while it’s been a horrendous journey for shareholders, for new investors, this downward volatility may have created a lucrative entry point for a recovery story.

Are these shares on the verge of an explosive comeback and worth looking at for a portfolio?

What happened to Playtech?

The gambling technology platform enterprise continues to be a market leader within its niche. And the stock’s sudden price collapse in May wasn’t caused by operational challenges, but rather a massive special dividend following the sale of its Snaitech business to Flutter Entertainment.

Yet since then, the stock’s continued to fall by double digits as management finds itself embroiled in a legal battle with rival firm Evolution AB, accusing the company of forgery, defamation, fraud and other anti-competitive practices.

Playtech vehemently denies the allegations. Assuming that these accusations are indeed untrue, the underlying business seems to be in a strong position for a comeback.

As a pure-play business-focused gaming platform provider, leadership is attempting to expand into new regulated markets, including the US and Latin America. This not only provides geographical diversification but also opens the door to cash flow expansion opportunities to strengthen the balance sheet – a key area of concern among debt investors.

However, the legal battle has me concerned. Even if Playtech wins, it still serves as a massive distraction for management. And that’s something its other competitors could capitalise on. With that in mind, I’m not rushing to buy Playtech shares right now.

What about Ultimate Products?

Unlike Playtech, Ultimate Products is having a much rougher time in terms of operational performance. The branded household products business is struggling to navigate a weak discretionary consumer spending environment, resulting in multiple profit warnings and growth collapse.

To management’s credit, a lot of effort’s being put into driving higher efficiency as well as strengthening the perceived value of its brands. While the impact of this isn’t reflected in the group’s current financials, it could quickly emerge once the spending cycle turns.

This recovery momentum could further be accelerated by the group’s European expansion ambitions. Nevertheless, the timing of this cyclical shift remains a mystery. And with earnings facing enormous pressure, the Ultimate Products share price could have further to fall.

The bottom line

Out of these two FTSE shares, Ultimate Products looks like it has the more promising recovery story to consider. There’s no denying that Playtech has far more substantial growth potential. But the fallout of its ongoing legal dispute could be disastrous, significantly increasing the investment risk.

Having said that, there are plenty of other FTSE shares looking primed for a rebound that could be even more promising.

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What’s going on? And has this secretly created a buying opportunity for long-term investors?

Investigating the crashes

Let’s start with the initial 60% collapse of Playtech shares earlier this year. In the last few years, investment analysts have been growing increasingly concerned about the state of Playtech’s margins and lack of growth. In response to the weakening sentiment, management began restructuring some of its operations, which included the divestment of its Snaitech business to Flutter Entertainment.

This move helped flood the balance sheet with cash and improve liquidity. But ultimately, the bulk of the sale proceeds was returned to shareholders in a massive €1.8bn special dividend. As a result of this large outflow of assets, the stock price naturally adjusted itself.

Skip ahead to this week, and the situation’s very different. Rather than any operational issues, Playtech seems to have found itself at the heart of a new legal scandal.

In 2021, a report was leaked to the media that claimed rival firm Evolution AB was operating illegally in sanctioned markets such as Iran, Syria, and Sudan. However, following a regulatory investigation, the claims made in the report were proved to be false based on forged documents.

Evolution’s now claiming that Playtech was responsible for this report as part of a “smear campaign” to damage its reputation and steal market share. And as such, it’s taking legal action.

What happens now?

Legal battles are a lengthy process, and it’s unlikely this story will be resolved until at least early 2027. What if Playtech’s found liable.

In this scenario, the financial penalties could be severe. The company would likely find itself paying:

1. Damages for all the financial harm Evolution’s encountered since the initial report’s release, alongside suspected lost revenue from reputational damage
2. Legal fees Evolution’s incurred
3. Regulatory fines for anti-competitive practices

It would also likely lead to a massive reputational blow, resulting in key clients distancing themselves from the scandal. And while it’s difficult to estimate a number, high-profile corporate scandals like this have previously reached into the hundreds of millions of pounds.

What now?

But that’s all hypothetical. Playtech was quick to deny the allegations, and the company may indeed be innocent in all this. Evolution’s been struggling for several years, and it’s not uncommon for lawsuits to arise in such situations, especially in highly competitive markets.

Ignoring this legal dispute, Playtech’s actually notably improved lately. Its restructuring has paved the way for a leaner enterprise, making good progress towards deleveraging its balance sheet and expanding into new growth territories like the US and Latin America.

That’s why institutional analysts have actually been hiking their share price forecasts in recent months. However, with an enormous legal battle coming up, it might nonetheless be wiser to consider remaining on the sidelines and look for other growth stocks to invest in right now.

The post After its share price crashed 60% in a day, is this now a bargain basement growth stock? appeared first on The Motley Fool UK.

Evolution, the Swedish “provider and innovator” of online casino games, commenced legal action in December 2021 against a US law firm alleging defamation and trade libel. After an exchange of legal documents, it now says it’s “unmasked” Playtech as engaging a third-party investigator to “prepare and disseminate a 2021 report containing highly inflammatory and knowingly false claims about Evolution and its business practices”. According to the group, the purpose was to “substantially harm the company for anti-competitive reasons”.

Playtech responded by saying that the claims were “wholly untrue” and that it lawfully commissioned a report “to better understand and verify concerns of significant regulatory and commercial importance”.

I’m going to leave it to the courts to decide the rights and wrongs of all this. Needless to say, I don’t think the bosses of these two will be exchanging Christmas cards this year.

One person’s trash is another’s treasure

However, after reflecting overnight, it appears as though some investors have spied a buying opportunity. By mid-morning on 22 October, the Playtech share price had recovered by around 6%.

Are they right? At first glance, I’m not so sure.

That’s because, aside from this legal case, Playtech has another important issue to contend with. There are persistent rumours that the government will raise taxes on the gambling industry in November’s budget. If this happens, the demand for the group’s technology platform is likely to take a big hit.

And there are calls to further regulate the industry. The World Health Organisation claims that 1.2% of adults are affected by a gambling disorder and has called for a ban on advertising. It also wants to see binding loss limits and stricter controls on availability introduced.

My verdict

However, on balance, I think Playtech has lots going for it.

Although any increase in taxes on the industry is likely to damage the group’s revenue and earnings, it’s important to remember that it’s a global operator. It has over 200 licensees in 45 different jurisdictions. In 2024, it earned 11.8% of its revenue in the UK. Its Italian business is five times bigger. Mexico is a significant market too.

And the group has an excellent track record of growth. From 2021-2024, revenue grew by 49% and adjusted earnings per share were 75% higher.

Some will be concerned that this hasn’t helped its share price. Since October 2020, it’s fallen 22%.

However, much of this can be explained by the group’s decision to sell one of its businesses for €1.8bn in May (£1.57bn at current exchange rates) — more than its current market cap of approximately £825m. It then used some of the proceeds to return €5.73 a share to shareholders by way of a special dividend, which explains the large drop in its share price as the stock went ex-dividend.

Encouragingly, current trading also appears to be strong. In September, it upgraded its earnings expectations for 2025. Although I’m mindful of the risks, I think Playtech’s a stock worth considering.

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2025’s proven to be a good year for many UK shares, with the FTSE 100 now at record highs. But not every business has been so fortunate. Back in May, Playtech (LSE:PTEC) saw its stock price collapse 60% in one day!

That’s undeniably a painful loss for existing shareholders. But following its latest results, the tide might be turning. Institutional analysts are issuing Buy recommendations, with many raising their share price targets. One even expects the stock to almost double within the next 12 months.

So is now the time to consider buying?

What happened to Playtech

As a quick reminder, Playtech’s a software enterprise for online gaming solutions. It’s technology powers some of the largest gambling platforms, enabling digital casinos, poker, bingo, and sports betting. This makes Playtech a critical piece of the value chain within the online gambling sector.

So why did the stock implode earlier this year? With concerns brewing about growth and margins, management began restructuring its business to streamline operations. This involved the sale of its Snaitech business to Flutter Entertainment, which flooded the balance sheet with cash.

Management then decided to return a large chunk of this capital back to shareholders, announcing an enormous €1.8bn special dividend. It was a clear signal that leadership was confident about its reformed business. But it seems the credit rating agencies disagreed.

Standard & Poor’s downgraded the firm’s debt rating below investment grade, citing concerns over its leverage, rising regulatory costs, and margin compression. Subsequently, with €1.8bn leaving the coffers the next day, investors began questioning the group’s short-term liquidity, which ultimately culminated in an enormous single-day share price crash.

Why so bullish?

Since this sudden surge in volatility, it seems Playtech’s long-term confidence may not have been misplaced after all. In its latest results, management raised full-year guidance, sparking a series of bullish upgrades from institutional investors.

• Deutsche Bank raised its share price target from 417p to 433p
• Peel Hunt reaffirmed its Buy rating with a 510p price target
• Jefferies raised its earnings projections and issued a 670p share price target – 99% higher than current levels

Digging deeper, this new wave of optimism seems to be driven by the group’s expansion into the high-growth US and Latin American markets. At the same time, debt reduction progress has continued while cash reserves have started to be replenished, resulting in a stronger balance sheet.

Simply put, it seems Playtech’s drastic restructuring was a success.

The firm isn’t quite out of the woods yet. Expanding into new territories comes with significant execution risk, especially for a highly regulated business. Furthermore, the group’s credit rating has yet to improve, resulting in higher borrowing costs, introducing refinancing risk.

Nevertheless, if the analyst’s projections are correct, Playtech could deliver explosive recovery returns for patient investors. That’s why I think investors may want to take a closer look.

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As my fellow Fool Ken Hall pointed out back in January, the share price climbed 60% to £7.22, making it one of the year’s standout mid-cap performers.

A few key things went right. Playtech sold its Italian consumer-facing business Snaitech to Flutter Entertainment for €2.3bn in cash.

This freed up capital for investment and shareholder returns and allowed Playtech to sharpen its focus on business-to-business (B2B) services, where margins tend to be better. The group also resolved a long-running dispute with Mexican partner Caliplay, which had previously clouded the growth outlook in Latin America.

The global online gambling sector is growing strongly, and Playtech’s technology platform and commercial partnerships gave it a good shot at riding that wave through 2025.

Solid progress

Full-year results in March confirmed the story. Adjusted EBITDA across continuing and discontinued operations rose 11% to €480.4m, slightly ahead of expectations. 

The B2B division alone grew 22% to €222m, hitting target two years ahead of schedule.

Strong trading in the US and Canada and a massive special £1.5bn dividend of up to €1.8bn once the Snaitech deal completed gave Playtech the feel of a business on a winning streak.

Then came the big drop. On 7 May, the Playtech share price slumped from 800p to 320.5p in a single day, a collapse of 60%.

I assumed this would be down to some nightmare profit warning, but no. That crash I heard was the sound of that special dividend landing. That £1.5bn represented almost two-thirds of Playtech’s market cap at the time. The dividend had been flagged for months, and the share price adjusted accordingly. The market cap is now £933m.

Peel Hunt analyst Ivor Jones still rates Playtech a Buy. Adjusting for the payout, his implied share price target is around 510p, giving potential 62% rise. Jones likes the simplified structure, which is now mostly focused on B2B gambling services and software-as-a-service platforms.

He also noted Playtech’s sustainable business model, maturing investments and a management team closely aligned with long-term growth.

Good news, not bad

Those buying today have missed the special dividend, obviously. But the lower entry price already reflects that. 

Playtech’s latest update on 21 May showed trading in the first four months was in line with expectations. Demand remains strong in the Americas, especially for live casino services.

Playtech is continuing to divest non-core assets such as German brand HAPPYBET and investing in growth markets.

The analyst consensus remains positive. Five brokers have issued one-year forecasts with a median target of just over 472p, which would mark a 55% gain from current levels. Four call it a Strong Buy, while one recommends Hold.

I’m a little wary of these. Five isn’t many. I suspect they may be a self selecting group, of those who liked the stock.

Gaming isn’t my favourite sector. It’s volatile, and tightly regulated. Although I accept that online betting has become deeply embedded in global consumer habits.

Playtech isn’t cheap either, trading at 19 times earnings. So it’s risky, but future growth does appear to be priced in. Any earnings slip will be punished.

I’ll need to do a bit more research here, before I consider buying. But I’m sorely tempted.

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Playtech (LSE: PTEC) was one of those gems for investors who owned the stock last year.
nfortunately, I wasn’t able to purchase Playtech shares before they jumped nearly 60% in 2024. The leap means they sit at £7.22 per share as I write on 16 January.

However, the gambling-focused technology company has shown up on my radar in recent weeks.

Why I’m watching

Recent gains aside, it’s the Playtech story that has really got me interested.

The company divested its Italian business, Snaitech, to Flutter Entertainment for €2.3bn (£1.9bn) in cash during September as it looked to streamline operations and free up capital for reinvestment or returning to shareholders.

A renewed focus on business-to-business (B2B) operations is something else I like given the potential to increase margins and capitalise on key growth markets.

Resolving a key dispute with Caliplay in Mexico was another factor behind the company’s surging share price as investors eyed a strengthened position in Latin America.

Why 2025 could be a good year

I think Playtech enters 2025 in a solid position, with a clear strategy and less baggage compared to 12 months ago.

Online gambling revenues continue to grow globally and Playtech’s technological advantage and strategic partnerships could be key.

This could also create some interest in the stock as a potential takeover target. While there’s no suggestion this is in the offing, any bids received would clearly need to offer shareholders a premium to the current share price to excite their interest.

Of course, there are plenty of reasons why Playtech may struggle to make further gains in 2025. Where there’s opportunity there’s also fierce competition, and the gambling industry is no exception.

Technology moves quickly, as do consumer preferences. Shareholders are also unhappy with a proposed €100bn (£84bn) bonus scheme following the Snaitech sale.

Set against a backdrop of economic uncertainty, these factors could mean 2025 is more challenging than many anticipate.

Valuation

While it may have a reasonable growth trajectory ahead, I do think Playtech is a touch overvalued right now.

Many gambling peers including Flutter are loss-making. That makes it hard to compare Playtech’s price-to-earnings (P/E) ratio of 23.6 to peers in a meaningful way.

I do see the tech side of wagering as a potential ‘winner takes all’ type of market. That’s where I mark Playtech down slightly, with its £2.1bn market cap significantly smaller than the likes of Entain (£4.3bn).

My verdict

I think Playtech is well placed as a technology-led provider in the growing gambling industry. However, I don’t think it’s one for me right now.

While online gambling revenues are up, I’m wary of how quickly consumer spending can change in the industry. Combined with ever-present regulatory changes and the stock feels a touch too rich for my blood at the current valuation.

The post Why last year’s FTSE 250 winner could continue to climb this year appeared first on The Motley Fool UK.

3i Group

What it does: 3i Group is an investment company with a primary focus on private equity and infrastructure. It invests in mid-market companies.

By Charlie Keough. It has been a volatile couple of years in the stock market. But amid all the chaos, 3i Group (LSE: III) has been a top performer. I reckon its shares still have more to give.

That’s because they look dirt cheap. They trade on a price-to-earnings (P/E) of just 7.6. For comparison, the FTSE 100 average is around 11. What’s more, their forward P/E is just 4.6.

Its share price growth in recent years has been driven by the strong performance of the largest holding in its portfolio, Action.

The Dutch discount retailer makes up around 65% of its portfolio. In its most recent update to investors, 3i reported that Action’s net sales jumped to €3.2bn, fuelled by a 9% rise in like-for-like sales.

With it making up nearly a third of its holdings, that does come with some risk. Its portfolio is unbalanced towards Action. If it experiences a downturn, that could spell trouble for 3i.

But the business has a strong balance sheet to weather a potential storm, including nearly £1.3bn of liquidity.

Charlie Keough does not own shares in 3i Group.

Gamma Communications 

What it does: Gamma Communications is a British technology that specialises in communication solutions for businesses. 

By Edward Sheldon, CFA. One UK stock that I believe is dirt cheap right now is AIM-listed Gamma Communications (LSE:GAMA). It took a big hit when interest rates rose a few years ago and is yet to fully recover. 

This company has a fantastic long-term track record. Between 2018 and 2023, for example, its revenue grew from £285m to £522m (that represents a compound annual growth rate (CAGR) of 13%). 

It’s also very profitable. Over that period, return on capital employed (ROCE) averaged 23%. 

None of this seems to be reflected in the share price at the moment, however. As I write this, the company’s price-to-earnings (P/E) ratio is only about 18. 

Of course, economic conditions in the UK (and Europe) are a risk here. A weak economy could lead to lower demand for Gamma’s services. 

All things considered, however, I think the stock is too cheap. It’s worth noting that analysts at Deutsche Bank have a price target of 2,250p, which is miles above the current share price. 

Edward Sheldon owns shares in Gamma Communications.

Investec

What it does: Investec provides global financial solutions for high net worth, corporate and institutional clients. It operates principally in the UK and South Africa.

By Harvey Jones. The UK financial services sector has looked undervalued for some years, from FTSE 100 insurers such as Legal & General Group to fund managers such as Schroders.

FTSE 250-listed international banking and wealth manager Investec (LSE: INVP) is another. Trading at just 7.42 times earnings, it’s cheaper than both.

When I spied that lowly valuation, I assumed its shares have had a rough time, but they’ve been on a storming run.

The Investec share price is up 26.56% over one year. Over five years, it’s more than doubled.

Earnings per share jumping 13.3% to 78.1p in 2024, despite macroeconomic uncertainty and persistent market volatility.

Return on equity climbed from 13.7% to 14.6%, above the midpoint of its 12% to 16% target range. The board also completed a £300m share buyback.

I see Investec as a growth stock and recent performance reflects that, but it pays a handsome dividend too. The trailing yield is 6%, covered 2.3 times by earnings.

What all financial services companies need now is a confident, growing economy. Sadly, that’s some way off. However, I think the risks are in reflected in today’s super-low Investec valuation.

Harvey Jones does not own shares in Investec.

ITV

What it does: ITV is the UK’s largest commercial broadcaster as well as producer of popular shows like Love Island.

By Royston Wild. Terrestrial viewers are falling in number as people increasingly choose to stream their favourite programmes at their convenience. But this isn’t taking the wind out of ITV’s (LSE:ITV) sails.

The business has invested heavily in its ITVX streaming platform in recent years. It’s a move that continues to pay off handsomely: the hub’s total streaming hours rose 15% in the first half, while the number of monthly active users increased 17%, to 14.6m.

With further improvements in content, technology and marketing coming down the line, the broadcaster can expect to sustain the platform’s strong momentum.

A fresh downturn in the ad market is a constant threat to company earnings. But the twin engines of ITVX and its heavyweight ITV Studios production arm still makes it a top FTSE 250 stock to consider, in my view.

ITV’s share price has picked up steam as 2024 has rolled on. Yet it still looks dirt cheap on paper, trading on a forward price-to-earnings (P/E) ratio of 8.9. It also deals on a sub-1 price-to-earnings growth (PEG) multiple of 0.5.

These figures are based on City predictions that earnings will soar 17% this year. Further rises of 8% and 10% are forecast for 2025 and 2026 respectively.

Royston Wild does not own shares in ITV.

Playtech

What it does: Platech develops software used by a number of online gambling companies.

By Alan Oscroft. Inflation is falling and the pressure on our pockets is easing. And that could mean a shift back to leisure spending in the next few years, including online gambling.

Why try to work out which of the big operators are likely to do the best, when we could buy shares in a company that makes the software that drives so many of them?

That’s what Playtech (LSE: PTEC) does, and its valuation measures are tasty now. We’re looking at a forward price-to-earnings (P/E) ratio of 11, dropping to 8.7 by 2026.

With earnings expected to double by then, it puts the PEG ratio at 0.2 for the current year, and still as low as 0.6 by 2026. Growth investors often see 0.7 or less as a strong buy sign.

We are at the mercy of gamblers and their whims, mind. And in some parts, authorities are tightening up regulations.

I see a potentially risky, but temptingly cheap, growth prospect here.

Alan Oscroft has no position in Playtech.

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