Canada’s hospitality industry has weakened considerably due to COVID-19, rising interest rates, and high inflation. However, popular TSX stocks appear mediocre compared to two hospitality and leisure stocks with market-beating returns. Today, you can buy Pollard Banknote Ltd. (TSX:PBL) and Gamehost (TSX:GH) and earn two ways: capital gains and dividends.
Soaring high
Pollard Banknote’s primary goal is to maintain its leadership position in the instant lottery and charitable games industry. Thus far in 2023, the leisure stock has shown tremendous stability, outpacing the TSX with market-beating returns. At $26.58 per share, investors are up 39.7% year to date and partake in the modest 0.6% dividend.
Don’t mistake the $715 million company for a pure gambling entity because the proceeds from the revenue-generating games go to food causes. The group of companies or world-class brands include Pollard Charitable Games Corp., Pollard Digital Solutions, Schafer Retail Solutions, and NEOPOLLARD Interactive.
Pollard Banknote partners with lotteries worldwide and offers high-quality products and services that provide the ultimate player experience. Besides the iLottery systems, customers can enjoy a full suite of digital solutions, interactive games, and player engagement platforms.
In Q2 2023, sales reached $130.3 million, 12.4% higher than in Q2 2022 and a record quarterly revenue. Pollard’s net income climbed 200% year over year to $7.5 million during the quarter. Its Co-CEO, John Pollard, said the results indicate that the strategy to grow all business lines profitably is generating positive results.
Pollard adds, “Overall, the strong demand experienced in all of our markets provides the foundation for continued growth throughout 2023 and beyond.” He also stated that the eGaming systems and iLottery in charitable gaming achieved solid earnings. Management expects the favourable results to move through 2023.
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Profitable and generous dividend-payer
Gamehost caters to business and pleasure travelers, including occasional gamers looking for entertainment. The hospitality and gaming properties of this $187.5 million company include the Rivers Casino & Entertainment Centre in Ft. McMurray, the Great Northern Casino, Service Plus Inns & Suites and Encore Suites.
The strip mall in Grande Prairie and the Deerfoot Inn & Casino in S.E. Calgary are also theirs.
While net income declined in the last two years, the $187.5 million company has not been in the red since 2019. In 2022, net income from continuing operations soared 127% to $12.7 million versus 2021. In the first half of 2023, operating revenue and profit rose 23.7% and 76.4% year over year to $40.7 million and $9.9 million, respectively.
Management said the Gaming Facility Operators Licences of Gamehost casinos have an indefinite life, although based on the latest license renewals, the validity is until June 30, 2029. Gamehost also notes that discretionary consumer spending at the casinos is quite resilient despite inflationary pressures.
At $8.64 per share, the year-to-date gain and overall return in 3 years are 9.22% and 84.9%, respectively. If you invest today, Gamehost also pays a generous 4.17% dividend, and the payout frequency of cash dividends is monthly.
Strong buys
The global pandemic in 2020 suppressed travel, tourism, and entertainment for a couple of years. However, they’re all back, and people are enjoying themselves again, as is apparent by the impressive earnings of Gamehost and Pollard Banknote. The latter, in particular, is a strong buy for its solid fundamentals amidst a challenging environment.
