SPO

Initiating coverage on football pools group Sportech (SPO) with a 70p ‘buy’ rating in July proved to be a good decision for Evolution’s Ivor Jones. The subsequent 23% increase in the stock price has put the analyst in Shares’ top 50 best calls of the past three months. In fact, we record his trade as producing a 26% return at 85.8p because the shares had initially slipped to 68p when we first logged his recommendation.

Jones likes the business for a number of reasons, defined by Sportech’s acquisition of the Vernon pools business. Whereas companies such as Sportingbet (SBT:AIM) rely on a handful of ‘VIP players’ who account for large amounts of revenue, and to whom it markets directly. Sportech has less concentrated revenue. There are clear rules surrounding football pools, whereas there are several grey areas surrounding the legislation of online poker operators, for example, in particular countries.

The downside is short-term growth prospects, says Jones. This could be rectified if Sportech successfully bought the Tote’s pools business or built up its online gaming service.

The analyst believes the shares could hit 135p by July 2009. As Shares went to press, the stock was trading at 88p, suggesting Jones could be moving further up the leaderboard next week.

by Dan Coatsworth