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As a long-term investor, I’m seeking to purchase shares that I can maintain for the long run. Generally, the companies involved might hopefully develop sufficiently big to be promoted to the FTSE 250 – and later even the FTSE 100.
One FTSE 250 share I believe deserves long-term buyers’ consideration for the time being is Hollywood Bowl (LSE: BOWL).
Why I just like the enterprise mannequin
Is 10-pin bowling cool, with the cachet of a buzzy leisure exercise like padel or pickleball? No – and for so long as I can bear in mind, it by no means has been.
But it surely has at all times hung round. By not being a buzzy pattern, 10-pin bowling additionally feels much less prone to fall out of vogue when developments change. In spite of everything, it’s not precisely in vogue within the first place.
A sure variety of folks in every technology wish to go bowling, even when solely often. That provides the leisure exercise sturdiness.
A bowling lanes operator can do nicely due to lane and gear rental charges, in addition to ancillary gadgets like meals and drinks. Some such services are operated as standalone companies, however Hollywood Bowl’s rising assortment of centres provides it economies of scale.
In addition to persevering with to develop in its house UK market, the corporate has additionally expanded to Canada, the place I see substantial progress alternative merely from shopping for present single facility operators, not to mention opening new ones.
Lengthy-term potential
In the intervening time, this FTSE 250 share sells on a price-to-earnings ratio of 17. That doesn’t strike me as a screaming cut price.
Keep in mind although, that I’m taking the lengthy view. From that perspective, I believe the valuation is engaging for a corporation with Hollywood Bowl’s traits.
It has a powerful place in an trade that ought to learn from ongoing demand. It has house to develop in its house market in addition to in Canada. Additional down the road, I can think about its working mannequin might be rolled out to different markets.
Hollywood Bowl has extra than simply bowling lanes in its portfolio, by the way. It has additionally been increasing its mini gold provide.
I see that as doubtlessly a great add-on, however the principle enchantment for me is the corporate’s core enterprise and the long-term progress potential it presents.
Passive revenue potential
In the meantime, the corporate’s dividend yield of 4.4% additionally seems to be engaging to me.
Any firm can face challenges. Pandemic restrictions wreaked havoc on Hollywood Bowl’s skill to opens its centres for enterprise. There’s a threat of such disruption in future ought to there be related restrictions in a public well being incident.
The Canadian growth additionally brings dangers, in addition to alternatives. Abroad growth might be fraught with unseen difficulties for any firm and Hollywood Bowl’s focus has traditionally been home.
Nonetheless, I proceed to see quite a bit to love concerning the funding case. I regard this as one FTSE 250 share for buyers to contemplate.
