Losing on penalties isn’t the conclusion to Euro 2020 that any England fan would have wanted. However, this isn’t to say there won’t be any stock market winners from the team’s nail-biting push for glory. One example is broadcaster ITV (LSE: ITV). Today, I’ll explain why.
FTSE 100 winner
Let’s start with the viewing figures. England’s progress through to the very last stage of the competition was good news for the company.
A few days ago, it was announced that almost 24 million long-suffering fans tuned in for the semi-final game against Denmark. Importantly, this was broadcast solely by ITV. That fact will surely have done no harm at all to the FTSE 100 stock’s advertising revenue. The latter has long been a problem for the company, due to online giants like Facebook and Alphabet (Google) stealing its thunder.Â
Sure, coverage of last night’s gripping final was shared with the BBC. However, I’m still willing to bet that a sufficient number of the estimated 31 million fans tuned in to ITV. We should get at least some indication of how beneficial the competition has been when it announces its latest set of interim results on 28 July.
Regardless, I’m not about to sell my holding just yet. I think there are other reasons to be optimistic.
Too cheap
Staying with football, let’s not forget that the World Cup is scheduled to take place in November/December 2022. This is a lot sooner than the 24-month wait that would ordinarily be the case.
Given Gareth Southgate and co’s recent progress, this should prove another huge draw for ITV. This is assuming, of course, that the England team stays in the tournament long enough for the FTSE 100 member to show a few games!Â
In the meantime, I reckon it’s likely that ITV will manage to keep viewers glued. The ongoing travel complications will have deterred many from even considering a trip abroad this summer. Yes, staycations should prove popular. However, the higher prices charged (coupled with the limited supply) will mean many will be restricted to day trips in the car, evenings at home and Love Island on the box.
By the time normal travel resumes, ITV should have seen a big recovery in advertising revenue from holiday firms and airlines. This should allow it to kick-start dividend payments again. Such a move will send a confident message to the market. Income investors will be attracted back to the fray, pushing the share price up.
And while investors should never buy stock purely on the suggestion that it might be a takeover target, I believe ITV will eventually be gobbled up by a deep-pocketed suitor. While I need to be wary of bias, a valuation of 11 times earnings just looks too tempting to me.Â
Solid hold
The ITV share price is up over 80% in the last 12 months. Once again, this highlights the potential gains available to patient investors like me if I’m able to buy when others are selling and hold for the recovery.
There’s no guarantee that there won’t be bumps in the road ahead. A resurgence of Covid-19 could threaten production schedules. A bout of great weather could also keep viewers away from the telly.
Even so, I’m keeping a firm grip on my shares for now and may potentially increase my stake.Â