In only a couple of months, however, these stocks have bounced back strongly. Indeed, those who had the courage to buy William Hill back in the middle of March will have seen their money grow an incredible 200% since.

With lockdowns now beginning to ease around the world, is there still time to get on board? Let’s start by taking a quick look at today’s trading update.

Game off

All things considered, this morning’s statement could have been a lot worse.

While a flagging retail arm meant that total revenue declined 5% in the 10 weeks before the coronavirus hit, the company was still making great strides online over this period. Overseas growth, particularly in Spain, Italy and the potentially-very-lucrative US market was strong in this part of the business. 

From 11 March to 28 April, however, net revenue tumbled 57%. That fall was partly due to the closure of the company’s entire retail estate as a result of the pandemic.

It wasn’t all bad. Encouragingly, the FTSE 250 member said today that online activity had not declined as much as expected. Punters were continuing to bet on sports like table tennis and football in emerging markets. Others were switching to games offered by the company. Interestingly, the introduction of a ban on customers using credit cards had not led to a material drop in activity.

William Hill has also done its bit to mitigate the impact of the coronavirus on its finances. Costs have been cut and dividend payments have been suspended. Having come to an agreement with its lenders, the FTSE 250 stock said that it finished the trading period “in a strong financial position with significant headroom“. 

FTSE 250 recovery play?

Shares in William Hill were racing ahead of the pack again in early trading, This suggests that investors believe the company still offers value. Are they right?

Well, as the company itself noted, there are signs that the sporting calendar could be about to get back on track. Football in Germany, for example, is expected to resume this month, albeit behind closed doors. Horse-racing is likely to return to the UK in June, having already restarted in France.

For its part, Hill said that it was currently planning to ‘power up’ its operations through a “staged opening of the UK retail estate in the second half of 2020″. Notwithstanding this, it did say that it would be withdrawing all future guidance on earnings.

With the shares still around 45% lower than where they were trading at the start of 2020, I can’t help but feel there’s still some money to be made. This is especially true given that the company is nicely positioned to benefit from the huge growth of gambling in the US as rules are gradually relaxed. 

I certainly wouldn’t go ‘all-in’ on William Hill though. After all, no one knows just how successful the lifting of restrictions will be. News of a second wave will almost certainly obliterate the gains made since March as events get postponed again. It’s a bet worth taking, in my view, but I’d be inclined to build a position gradually.

The post This FTSE 250 stock has jumped 200%+ since the market crash. Would I buy now? appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares 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.

A brilliant bet

William Hill (LSE: WMH) is up against it right now. The bookmaker suffered an eye-watering profits fall last year as it suffered from fresh regulatory action in the UK and the reduction of maximum stakes on fixed-odds betting machines.

It’s going to take some time for the FTSE 250 to adjust to these changes and the lost revenues from its money-spinning machines. It’s why City analysts are expecting another big bottom-line drop (by 48%) in 2019.

On the plus side, though, it could be argued William Hill’s low forward P/E ratio of 14.6 times bakes in these troubles. And given the company’s longer-term outlook remains strong, underpinned by the international rollout of its online operations, and in particular its drive into the US, I reckon this makes it a great value pick.

City analysts expect earnings growth to return in 2020 and that William Hill can therefore afford to keep paying big dividends in the meantime. This means that the dividend yield for this year sits at a princely 5.6%.

Poised to jump?

Tyman (LSE: TYMN) has proved itself to be a great dividend grower over the past half a decade, thanks to solid and sustained profits growth over that period.

It’s hardly front page news that City analysts, in forecasting extra bottom-line progress through to the close of next year (a 7% rise is predicted for 2019), are also expecting shareholder payouts to keep rising through this period too. And for this year this leaves a big 5.1% yield.

The investment community remains reluctant to buy the door and window component manufacturer because of the poor condition of the US newbuild market. But with home loan conditions there improving of late, it’s possible that Tyman’s end markets will begin to improve, giving room for its share price to surge again.

The small-cap’s low prospective P/E multiple of 8.6 times could provide further ammunition for bouts of fresh buying activity too.

One last great buy

My final selection is Charles Taylor (LSE: CTR), a splendid momentum stock which offers a chunky 5% forward yield. The professional insurance services provider is expected to endure a small earnings reversal in 2019. But thanks to its strong long-term outlook it’s predicted to keep lifting dividends.

Charles Taylor’s profits might have been pummelled by a series of exceptional costs last year but the pain it endured should go some way to help it achieve its long-term objectives.

Acquisitions made in the last year include those of claims services specialists FGR of Chile and Aasgard Summit in the US, moves that help the small-cap in its quest to become “a joined-up claims services business with global scale.” And its presence in Latin America was given an almighty boost with the purchase of technology and software giant Inworx too.

At current prices, Charles Taylor boasts a prospective P/E ratio of 9.2 times. In light of its exciting growth strategy, I would consider the insurance services star far too cheap right now and therefore an exceptional buy.

The post 3 embarrassingly-cheap dividend stocks (with 5% yields) I’d buy today appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any of the shares 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.

Hedge your bets

Man (LSE: EMG) is one of the world’s largest listed hedge funds and, as well as producing attractive returns for its clients, it also looks after its shareholders. At the time of writing, the stock supports a dividend yield of 5.5% and the payout is covered 1.6 times by earnings per share.

City analysts are expecting the company to report a big jump in earnings per share this year and, according to a trading update for the first quarter of 2019 published by the company today, it looks as if the group is on track to meet this projection. During the first three months of the year, Man attracted an additional $3.8bn in funds, taking the total value of funds under management to $112.3bn at the end of the opening quarter.

As Man charges clients based on the value of assets invested with the company, more funds invested means higher management fees, which is excellent news for shareholders. As well as its market-beating dividend, the firm has also been buying back stock as an alternative way of returning cash to investors. So far, Man has spent $65m of its $100m share repurchase authorisation, announced in October 2018.

Management’s decision to initiate a stock buy-back, as well as the company’s 5.5% dividend yield, tells me it’s committed to returning additional capital to investors. That’s why I think this is one of the best income stocks in the FTSE 250.

As well this highly attractive cash-return strategy, shares in the company are also trading at a relatively undemanding 11 times forward earnings. With earnings growth of 60% pencilled in for 2019, the stock is trading at a PEG ratio of 0.5.

The house always wins

The other FTSE 250 income stock I think you should consider adding to your portfolio today is William Hill (LSE: WMH).

Shares in this gambling giant have been under pressure for the past 12 months due to concerns about the impact of the government’s decision to restrict the maximum stake on all fixed-odds betting terminals to just £2. The group revealed the financial cost of this decision at the beginning of March when it announced it’s writing down the value of its high street estate by £883m. Management also expects the changes to cost the business around £70m-£100m per annum in lost profits.

This is a significant setback for the group but, in my opinion, it will be more than offset by the growth of the US sports betting market. Estimates vary, but figures suggest the market could be worth $8bn by 2030 and William Hill is fighting to grab as much of the market as possible. The company has already announced several collaboration agreements with US partners and, in my opinion, concentrating on dominating this market is far more important to the business than the loss of its fixed-odds terminals.

With this being the case, I reckon it might be a good time to snap up shares in the gaming giant today and pocket the 5.7% dividend yield the stock currently offers while the US growth story plays out.

The post Looking for FTSE 250 income stocks? Here are 2 of my favourites appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no 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.

Are today’s less-than-comforting full-year numbers — not to mention a cut to the dividend — an indication that investors should continue to avoid the troubled £1.6bn cap?

I think so. 

High street woes

To be clear, the huge drop in profits was expected. 

As a result of the government’s decision to restrict the maximum stake on all fixed-odds betting terminals to £2 from April, the company has needed to write down the value of its high street estate by a whopping £882.8m.

Going forward, management expects this new rule will reduce profitability from this part of its business by £70m-£100m and could lead to the closure of “up to 900 shops“

The full impact will clearly depend on how punters respond. Hill might believe that its status as the largest operator puts it “in a strong position to capture market share” but I still need to be convinced. 

Attempting to put a positive spin on things, CEO Philip Bowcock stated that recent regulatory decisions had at least given the firm some “much needed clarity“, allowing it to devise a new five-year strategy and set a target of doubling profits by 2023.  I think the latter may be too optimistic.

It wasn’t all bad…

Don’t get me wrong – there were some positives. Revenue climbed 2% to £1.62bn with the company also reducing net debt by 40% to £308.1m. 

Like others in the space, Hill is also seeing growth online. 

Here, operating profit climbed 11% before a £17m hit from new measures surrounding customer due diligence. The acquisition of Mr Green — completed back in January — should help maintain this momentum going forward.

That said, the key driver of growth for the company going forward will surely be the US sports betting market. Having been “first out of the blocks“, Hill now has a 34% market share (by revenue) across the seven regulated states.

Worth a punt?

I don’t think there’s a stock that I’ve changed my opinion on more times over the years than William Hill. Right now, I’m pretty negative.

Based on an expected 42% drop in earnings over 2019, the shares now trade on a forecast P/E of 16. That’s far too rich for me, despite the aforementioned growth opportunities over the pond. While no doubt attractive, it can’t be forgotten that the business is already operating in a very crowded market and that competition for this new prize will surely only become more intense as the months pass. 

The 9% reduction in the dividend from 13.2p per share in 2017 to 12p per share is also another bitter pill to swallow. Granted, it’s not as big a cut as that seen at this FTSE 100 retail stalwart but, with the shares on something of a losing streak (down 40% in the last 12 months alone), Hill’s income credentials were one of the few things keeping me interested. 

Personally, I think there are far better stocks in the gaming/gambling sector as things stand. Indeed, so positive am I on one in particular that I’ve actually gone ahead and taken a position. You can read all about it here.

The post This FTSE 250 stock is on an awful losing streak and today’s news won’t help appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares 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.

Based on today’s less than enthusiastic response to its latest trading update (-3%), it seems many market participants still need to be convinced that this fall is overdone. 

Losing streak

While short on detail, today’s release did state that adjusted operating profit for the 53 weeks to the start of January is expected to come in around £234m. This is 15% below that achieved in the previous year (although it was at least in the middle of the range previously predicted by the company of between £225m and £245m).

At least some of the blame was attributed to a reduction in year-on-year profits from Hill’s retail estate in the UK, itself suffering as a result of “wider high street conditions.”

With new limits on fixed-odds betting terminals being introduced later this year, and recent consolidation in an already extremely competitive industry, it’s hard to see things improving here any time soon. 

Instead (and like many of its peers), the £1.5bn-cap regards the potential relaxation of legislation surrounding sports betting in the US as its primary growth opportunity. On this front, the firm’s partnership with casino chain Eldorado Resorts is a positive step.

However, time will tell as to whether this market will prove as lucrative as management believes. The FTSE 250 constituent’s US operation “broadly broke even” last year after taking into account “significant expansion costs.“

Hill’s shares traded on 12 times earnings before markets opened this morning and yielded nearly 6%. In addition to this, and the aforementioned opportunities in the US, the planned imminent purchase of Swedish gaming company Mr Green and“good underlying performance” from its online offering last year, might be enough to convince some contrarians to take a position.

That said, I’d be inclined to wait to see what exactly CEO Philip Bowcock has planned for its UK estate (due to be “remodelled” in 2019) before deciding whether the company is finally worthy of investment. 

Better odds?

Of course, William Hill isn’t the only company that will benefit from a change on betting rules across the pond. £4bn-cap GVC Holdings (LSE: GVC) — owner of rival Ladbrokes Coral — could do very well from the development, given its US joint-venture with MGM Resorts.

In sharp contrast to the reaction to Hill’s news, last week’s trading update on the whole of 2018 was cheered by investors and it’s not hard to see why. Proforma underlying earnings are now likely to come in between £750m and $755m — ahead of what the market was expecting.

Despite like-for-like revenue falling 3% in the UK, GVC saw online revenue jump 19% over the year. Business was also good in Europe with revenue from retail growing 16%.  

Based on these numbers, CEO Kenneth Alexander reflected that GVC was “materially outperforming the market” and taking market share from rivals in all territories it operates in. 

Still 40% below the share price highs achieved last July, GVC trades on almost the exact same valuation as William Hill’s. A forecast yield of almost 4.8% is lower than that offered by the mid-cap, but this payout is better covered by anticipated profits. 

The post Why I still don’t think it’s time to bet on this battered FTSE 250 stock appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.

In the year so far, to 23 October, the gaming company saw total net revenue rise by 4%, with expansion in the US doing exceptionally well. US revenues from existing operations climbed by 29% — and the firm’s gross win margin on new business reached 11.6%.

The company now expects full-year operating profit of between £225m and £245m, which is lower than previously expected, partly due to the clampdown on fixed odds betting in the UK and the closure of a number of accounts in the fight against problem gambling and money laundering.

US expansion

But that’s surely eclipsed by future opportunities in the US which, in the words of chief executive Philip Bowcock, is based on “the emerging US sports betting opportunity following the Supreme Court’s decision to overturn PASPA in May.”

The Professional and Amateur Sports Protection Act of 1992 had effectively outlawed sports betting, and Mr Bowcock pointed out that William Hill is “the only company to be taking sports bets in the first five states to have regulated.” He added: “Our goal is to be in every state.”

Even with a 20% drop in EPS forecast for this year, we’re still looking at P/E multiples of only around ten. And dividend yields are predicted to exceed 6% by 2019.

I see a market looking at the short term here, and neglecting a long-term opportunity.

Property cash

I invested in a buy-to-let property many years ago, and I cautioned recently about my own experience and what I see as the kind of year-to-year pitfalls that potential new property investors might overlook.

Right now I’m fine with it, but over the past decade I’d have done a lot better with the cash in shares of our top housebuilders instead.

Over the decade I’ve had total returns of under 4% per year, but dividends from Barratt Developments (LSE: BDEV) shares would have wiped the floor with that and I’d be looking forward to a forecast 8.4% yield this year (including special dividends).

So why are people not snapping up Barratt shares?

After years of cracking growth, fears are growing of a slowdown in house prices, edged on by the gloom and despondency surrounding Brexit. But I’m just not seeing a market slump coming, not with our chronic housing shortage nowhere near solved.

Market shift

And even if London prices are cooling while other parts of the country pick up… well, I see that as a good thing. And it’s surely not going to stop Barratt Developments raking in the cash.

The budget should help too, extending the government’s Help to Buy scheme by another two years.

And while the doomsters might be expecting a crash, the City’s analysts aren’t, projecting a further 4% EPS growth for Barratt this year to drop the shares to a valuation of less than eight times forecast earnings.

To me, that’s pricing in far more downside than I can realistically see, and I still rate Barratt Developments as a top buy.

The post Can this 6% dividend stock smash the Barratt share price? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any of the shares 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.

Housebuilders such as Persimmon (LSE: PSN) have also been affected by uncertainty surrounding the UK economy. The company’s share price is down 20% in less than five months, which suggests that investors are cautious about its prospects.

As such, it could offer a favourable risk/reward ratio for the long run. However, it’s not the only stock which could deliver FTSE 100-beating performance in future years.

Growth potential

One company which could also outperform the UK’s main index is gaming business William Hill (LSE: WMH). It announced a recommended cash offer on Wednesday of £242m for sector peer Mr Green. The company is an iGaming group which has operations in 13 countries through brands such as Redbet.

The growth acquisition would strengthen the enlarged company’s online capabilities and also provide it with a growing international presence. It would also provide access to an international hub through which growth could be driven. The deal is expected to be earnings accretive from the first full year of ownership, with synergy benefits of £6m due to be delivered.

The prospects for William Hill could improve following the acquisition. The gaming sector has seen a significant amount of consolidation in the last few years, and remains highly competitive. With growth in the international marketplace still relatively high, the deal could be a sound move.

Since the stock has a dividend yield of around 5.5% and trades on a price-to-earnings (P/E) ratio of around 12, it could have growth potential. Although its past performance has been mixed, positive earnings growth forecast for next year could boost its share price prospects.

Attractive industry

The prospects for the Persimmon share price seem to be relatively volatile at the present time. Investors appear to be concerned about the outlook for the UK economy, with consumer and business confidence being low ahead of Brexit. This trend could continue over the coming months, and so it would be unsurprising for the stock to experience a further fall in its valuation over the near term.

However, with demand for new homes being high and Persimmon set to benefit from government policies such as stamp duty relief and Help to Buy, the company’s operational performance may be sound. And with its shares trading on a P/E ratio of 10 despite earnings growth of 7% forecast in the current year, they may offer a wide margin of safety.

Furthermore, the housebuilder has accumulated a significant net cash position in recent years. I think this could provide it with a significant amount of financial flexibility so that if the housing market does experience a difficult period, it is able to overcome it and generate high returns in the long run.

The post Have £1,000 to invest? Persimmon is a FTSE 100 dividend stock I consider to be a bargain appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Persimmon. 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.

Acquisition target

No sooner has Whitbread agreed a sale for Costa than attention shifted to what may happen to the group’s other businesses. There’s speculation that the other arm, Premier Inn, could find itself a viable acquisition target by a larger hotel chain. Interested parties in the budget-priced hotel chain include global hoteliers, such as Intercontintal, Accor and Marriott, as well as private equity groups.

But even if a bid does not materialise, there are alternative ways to unlock value from the Premier Inn business. Some analysts reckon there is a potential asset management opportunity from the sale and leaseback of some of its freehold properties, which could raise up to £4bn in cash. Others suggest another way to become more ‘asset-light’ would be for Premier Inn to make the transition to a franchise model — such a move would also reduce the volatility of earnings.

Improve returns

After Costa’s sale is completed, improving returns at Premier Inn would become Whitbread’s main priority, but there’s no consensus among analysts over the best course of action. And with negative like-for-like sales growth in the UK, there’s growing concern over the impact of Brexit uncertainty and oversaturation on the business.

Whitbread is looking to push forward Premier Inn’s expansion into Germany to offset the slack in the UK, but with an untested brand and strategy, future growth is far from assured. With this in mind, I reckon the group still faces sizeable execution risks over the medium term.

Expansion spree

Meanwhile, bookmaker William Hill (LSE: WMH) is going on an expansion spree in a bid to build up its US presence. On Wednesday, the company announced that it has agreed a new partnership with American casino group Eldorado Resorts to provide digital and land-based sports betting services.

It’s the third such deal for the company across the Atlantic, which follows a recent US Supreme court ruling to legalise sports betting in the country. The US, with a population that is nearly five times greater than the UK, is potentially a massive growth opportunity for William Hill.

This opportunity also comes at a convenient time, given that the UK government is set to drastically reduce the amount which can be wagered on the gaming industry’s lucrative fixed-odds betting terminals. But of course, William Hill is not the only company looking to grab a slice of the action in the US. In recent months, Paddy Power Betfair and GVC Holdings have also entered into similar deals with their US partners.

Still, it’s not as if the market has priced-in much of this international opportunity to its share price. Valuations are undemanding, with William Hill valued at just 12.2 times its expected earnings this year. Prospective investors can also find a good yield here — 5.2% at the time of writing.

The post Does the Whitbread share price have further to go? appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended GVC Holdings, InterContinental Hotels Group, and Paddy Power Betfair. 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.

Today, I’m going to weigh up the pros and cons of investing in the enterprise as it returns to growth.

Rising losses 

At the beginning of August, William Hill reported a mixed set of half-year results. Adjusted pretax profit declined 13% to £96.3m. But in many ways, this figure is misleading. The company also reported an exceptional charge of £916m, which pushed it into a pretax loss of £820m. This large write off included £883m associated with the UK government’s decision to cut the maximum bet for fixed-odds betting terminals. 

Of the £916m exceptional charge, £17.2m was associated with the group’s expansion into the US and additional restructuring costs. After stripping out all of these costs, adjusted operating profit on existing operations increased 1%, and revenues rose 3%.

International expansion 

William Hill’s push into the US excites me because this is a market with tremendous potential, as it’s still relatively undeveloped. Today, the company announced it had reached an agreement with Eldorado Resorts to become the exclusive partner “in the provision of digital and land-based sports betting services as well as online gaming.” As a result of this deal, the firm now has a presence in “13 states where sports betting is either legal or sports betting bills are tabled.” 

The blossoming US market should allow William Hill to continue to grow despite problems at home. Estimates vary, but it’s rumoured that $150bn is wagered on sports in the underground market each year across the country. This indicates the size of the opportunity for the gambling group and its peers could be many billions of dollars.

I reckon the market isn’t taking this opportunity seriously enough. Shares in William Hill currently trade at a forward P/E of just 10.4 and yield 5.4%, implying investors are not expecting any fireworks from the business. With this being the case, now could be the time to buy.

Too expensive? 

When it comes to growth, I think William Hill could be a better investment than its larger peer Paddy Power Betfair (LSE: PPB).

The main reason why I reckon Paddy Power’s returns in the years ahead will disappoint is valuation. The stock looks expensive. Shares in the betting company are valued at 15.6 times forward earnings, which makes them 56% more costly than William Hill. This premium earnings multiple leaves no room for error if the business’s growth stumbles.

The company is following William Hill into the US. It acquired renowned daily fantasy sports operator FanDuel in May and is planning a significant expansion across the continent as sports betting becomes more accepted.

In the first half of 2018, the group’s US revenue lept 21% to $79m. Further acquisitions are planned to build Paddy Power’s presence within the region, adding to its existing offering. With cash on the balance sheet of £149m at the end of the last reported period, the firm certainly has the resources to chase new deals.

The post Why I’d dump this FTSE 100 growth champion to buy its FTSE 250 peer appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Paddy Power Betfair. 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.

While the stock has an uncertain future, it may also offer investment potential. A low valuation coupled with growth potential from a refreshed strategy may lead to impressive total returns. As such, it could be worth buying alongside a FTSE 250 stock which also has a low valuation. Both shares could help to boost your retirement prospects – especially with the State Pension age set to rise.

Low valuation

Following its share price fall, BT now has a price-to-earnings (P/E) ratio of around 10. This suggests that investors have taken into account the risks facing the business as it seeks to implement major changes. For example, it is aiming to become more efficient through a headcount reduction. This could help to improve its financial performance in the long run, although in the short term, it is expected to report a decline in earnings. In the current year its bottom line is forecast to fall by around 7%, with a further fall of 2% due next year.

As such, its share price performance in the near term could be somewhat mixed. However, the promise of a new CEO and the prospect of further strategy changes may have a positive impact on investor sentiment. After all, BT has a strong position within a range of key markets, and given the right strategy, it could generate improving financial performance. On such a low valuation, now could be the right time to buy it.

Uncertain future

Also offering a low valuation at the present time is gaming company William Hill (LSE: WMH). It reported a mixed set of half-year results on Friday which showed a fall in adjusted pre-tax profit of 13%, with it declining to £96.3m. The company faces regulatory change which looks set to negatively impact on its financial performance. However, with political changes taking place in the US, there may also be growth opportunities available to the business over the medium term.

With the stock trading on a P/E ratio of around 12, it seems to offer a wide margin of safety. Certainly, there may be less risky shares available elsewhere within the FTSE 250 at the present time. But with a diverse business model that could offer growth potential in the long run, the stock could have a favourable risk/reward ratio. Alongside this, a 4.4% dividend yield which is covered almost twice by profit suggests that its income appeal remains high for the long term.

The post Forget the State Pension: the BT share price could help you to enjoy a prosperous retirement appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any of the shares 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.