Online gaming company Playtech (PTEC) is likely to be the least affected leisure stock in the event of a ‘leave’ vote in next week’s EU Referendum, according to broker Canaccord Genuity.
Online gaming stocks are generally result-agnostic and Playtech’s growing cash pile and geographically diverse earnings make it even more resilient, says analyst Nigel Parson.
Shares in the £2.5 billion cap have dropped 7.3% to 778p since the start of June, in line with a 7% drop in the All Share Travel & Leisure index, but Parson argues it’s a ‘standout under-performer’.
Playtech had net cash of €658 million at the end of 2015 which gives it the firepower to make significant acquisitions. In May, it bought Swedish slots gaming company Quickspin for €50 million and said it was in active discussions regarding a number of other bolt-on and larger acquisitions for its gaming and financials divisions.
Food service giant Compass (CPG) is also a defensive play on Brexit owing to the fact that 89% of its revenues come from outside the UK. Its shares have slipped just 0.5% to £12.81 since the start of the month.
The biggest leisure sector losers so far in June are pub group Punch Taverns (PUB), down 15% to 97p, travel and logistics specialist Dart (DTG), down 10% to 581.8p, and Premier Inn and Costa owner Whitbread (WTB), down 6.5% to £39.37.
‘We see highly geared stocks such as Punch and Enterprise Inns (ETI) as vulnerable, as well as tour operators who could suffer from weaker Sterling in the wake of a leave vote,’ says Parson.
A poll of senior executives in the eating and drinking out sector found 80% thought leaving the EU would be bad for business. Two thirds of those polled by MCA said a Leave vote would result in a moderate recruitment crisis.
Parson reckons Whitbread is the stock to buy in the event of a ‘remain’ vote. ‘It’s the bell-weather stock in the sector and it’s liquid,’ he argues.