I think this FTSE stalwart is one of the best growth shares around!

Growth shares come in and all shapes and sizes. Our writer thinks this FTSE 250 giant has great prospects for the future, and explains why.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As I was looking for growth shares to help future-proof my holdings, one pick that I came across was ITV (LSE: ITV).

You might – like me, at the start – be wondering how ITV fits into growth stock territory. Let me break it down.

Iconic broadcaster

I have many fond memories – before the world of digital TV – of watching ITV programs with my parents, siblings, and even grandparents. Steeped in history and prestige in the UK television market, ITV has grown to become the biggest commercial broadcaster in the country. It still continues to churn out favourites such as Coronation Street, on air for decades, as well as more recent icons like I’m a Celebrity…

Despite ITV’s popularity, the shares haven’t had the best time in recent years. Over a 12-month period, they’re up 9% from 71p at this time last year, to current levels of 78p.

Recent woes and risks to note

As I touched upon earlier, the digital revolution has hampered more traditional broadcasters like ITV. Being able to access lots of content at their fingertips, whenever they want, has led consumers to shift towards other platforms. The most popular names include Netflix, Apple TV, and Amazon Prime, to mention a few. This changing of the guard has threatened ITV’s status, and earnings and returns.

My other issue is the impact of economic volatility on advertising revenue. This is usually a big money spinner for broadcasters, especially ITV. Advertising spending is usually first on the chopping block when volatility hits and businesses scramble to conserve cash. This has hurt ITV in recent times, but once volatility dissipates, a spending increase could boost its earnings and growth.

Looking ahead and fundamentals

I reckon exciting growth could come from ITV’s own streaming platform, ITVX. It has invested heavily into this, in keeping with changing habits around the way the world consumes content. Signs from its recent half-year report show this investment is paying off. Streaming hours rose 15% compared to the same period last year.

Furthermore, ITV Studios – its production business – has produced some fantastic content in recent years. Stand out names include I’m a Celebrity, and Love Island. It also produces content for other platforms, which can help grow earnings and returns.

From a fundamental view, the shares trade on a price-to-earnings ratio of close to eight, making the shares look extremely attractive. Furthermore, a dividend yield of over 6% is enticing as a passive income opportunity. However, it’s worth noting that dividends are never guaranteed.

Final verdict

Despite challenges to navigate, I reckon ITV has some great growth prospects ahead. It looks to be backing itself to grow and pivot to the changing face of content consumption, based on investment recently.

In addition to this, once economic turbulence clears, advertising spend could be another avenue for the business to grow earnings. Plus, this could further boost investor sentiment and potentially the share price too. Furthermore, the fundamentals look attractive to me with a good entry point, and passive income opportunity.

If I had some cash to buy some shares today, I’d happily do so.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Great dividend stocks! Here’s the forecast for Associated British Food shares to 2027

Associated British Foods' shares have dropped in value this year. Does this present a dip-buying opportunity for dividend investors to…

Read more »

Investing Articles

Should I sell my FTSE All-Share index fund and buy a S&P 500 tracker instead?

Harvey Jones is wondering whether now is a good time to invest more money in the S&P 500, after a…

Read more »

Investing Articles

Should I buy dirt-cheap BT shares after the recent pullback?

BT shares were on the up but now they're sliding again after the board trimmed full-year guidance. Now Harvey Jones…

Read more »

Investing Articles

Up 28%, can the easyJet share price keep rising?

The easyJet share price has gained altitude over one year but plunged over five. Is now an attractive time for…

Read more »

British Isles on nautical map
Investing Articles

Should I buy more BAE Systems shares at 1,350p?

BAE Systems shares have had a fantastic run since early 2022, yet still don't appear overvalued. Is it now time…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

7% yield and a cheap valuation! Is this one of the best shares to buy this month?

Christopher Ruane has been looking for cheap shares to buy. This one has a 7% dividend yield, so is it…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

Should I buy National Grid shares for the big dividend before it’s too late?

This year's price weakness has left National Grid shares on what looks like a tempting valuation. I hope it doesn't…

Read more »

Investing Articles

There are now 5,000 ISA millionaires! See the surprising UK dividend shares they’re buying

The number of ISA millionaires is growing all the time and guess what? They're really into blue-chip dividend shares listed…

Read more »