Some people believe that investing is a science. Others think it is art. In some cases, it can be a pure gamble. Withthesebettingstocks, you combineall three.
Jack The LAD
Sometimes you sell a stock and never look back. That is what I have done since offloading Ladbrokes (LSE: LAD)two years ago. Its performance was so sluggish, and prospects so hazy, that I didnt think I was missing anything. And I wasnt, at least until recently, when the share price finally showed some spirit to surge35% over the last six months.
Ladbrokes is still trailing the field when it comes to online gambling, as it was when I sold. It does now generate20% of its revenues from the net these days, but it is still missing a trick, with Paddy Power reckoning that 90% of growth will come from mobile.
Ladbrokes merger with Coral may make it the UKs largest bookmaker, with around 4,000 high street betting shops (assumingit gets regulatory approval on 24 June), but when it comes to online business it will be outmatched by the newly-merged might of Paddy Power Betfair.
The enlarged Ladbrokes maygenerate 65m but it will also start life with 1.3bn of gambling-related debts, and I dont fancy those odds.
William, it was really nothing
Heres something else that hasnt changed: rival William Hill (LSE: WMH) continues to thrash Ladbrokes. Over five years, William Hills share price has grown166%, compared withjust0.22% forLadbrokes.
William Hills 2015net revenues fell 1% to 1.59bn, although group operating profit creptup by 2%, to291.4m, before additional UK gambling duties of 87m were taken into account, which converted this into a 22% loss.
These results looked bad against after a highly successful2014, but management is confident about the future, with chief executive James Henderson talking up the companys omni-channel strategy, technological innovations and Australian growth plans, and unveilinga share buy back as well.
William Hill remains solid, but trading at 16.6 times earnings and yielding 3.09%, I feel there must be better punts out there.
Play the game
Investors in online gaming specialistPlaytech(LSE: PTEC)have also been onto a winner with the share price up139% over the last five years. Its full-year 2015 results show why, with management hailing another year of double-digit underlying revenue growth, with revenues up 38% to 630m on a reported basis.
With a cash balances of 857.9m its gaming division is lining up potential acquisitions, and if they fall through, the company mayreturn cash to shareholders instead.
There is always a price to pay for success and in the case of Playtech it is 16.55 times earnings, which is more temptingthan William Hills similar valuation. The yield is just 2.45%, but at least management has justrewarded investors by hikingthe dividend by 8%, against just 2.5% at William Hill, and a cut from 8.9p to just 3p per share at Ladbrokes.
Playtechchairman Alan Jacksons outlook for 2016 is notably more bullish than anythingLadbrokes and William Hill can muster, and Playtechlooks the bestbetof the three.
I reckon there is an even more exciting flutter on the UK stock market today.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.