The Stars Group Inc (TSGI.TO) Buy, Sell or Hold

The Stars Group Inc (TSGI.TO)

37.49

+0.36 (0.97%)

as of May 6, 2020, 8:00:00 pm Market Open.

70 watching

COMMENT

GC-T vs TSGI-T He does not own either right now. GC-T probably offers highs growth opportunity with their expansion plans in Ontario. TSGI-T is trying to convert poker players into their higher margin casino and sports book.

BUY

Really like this company. There has been some drama in the company but has been well run. They own great brands. Starting to open up in the US. Investors are nervous on the debt load. But they have paid down their debt before. Good valuation for a leader in the online gambling.

WATCH

Some states are considering legalizing sports gambling. Stars have been in online poker, then built up their casinos and are now entering sports. This is definitely on his watch list.

BUY

They went from $3 to $21 in 8 years but did nothing recently. They bought a sports betting company just months before it was legal in the US. They have a huge cash flow and can pay down debt. It is an extremely cheap stock. They have done nothing wrong. Yet investors can't deal with them reducing their guidance. It is the same company as when it was $38.

TOP PICK

Its valuation is very good after a correction. They've been on a buying spree in Australia and the UK in online gaming. Expect a 10% compound growth rate over 5 years. Positioned to get into the AR sector of this industry. Caveat: expect volatility. (Analysts’ price target is $40.68)

PAST TOP PICK

(A Top Pick Dec 05/17, Down 13%) From a FMV, all the promises of things to come aren't yet built into their earnings forecast. But the long-term is good. He sold his shares at higher prices, and is waiting for another chance to buy it.

BUY

A lot of momentum in the first part of the year. They made three big deals. Largest player in the space. Everybody knows their Poker Stars brand and they want to use it to get into other segments. They are excited about this Canadian name. Trading at ten times next year earnings. Even as they are leveraged, he thinks the valuation is compelling.

DON'T BUY

Was a strong uptrend since mid-2017, then broke the neckline. It'll end up the in low-$20's. He's bearish.

DON'T BUY

Knows them only a little. The political risk in gambling makes him nervous. They've come off quite a bit recently, but doesn't understand why. There are better investments than this.

DON'T BUY

Another company that decided to change its name. It has rolled over so has negative price momentum. It is reasonably priced and beat on the recent quarter but the volatility and price momentum keep him away from it.

TOP PICK

It's fallen too far too fast after a big purchase to get them into sports betting in a major way. They're almost more like a a tech company rather than a casino one with their mobile operation. It'll take time to pay debt, but it generates a lot of cash flow. If the US opens more sports betting, Stars will benefit. Cheap at 10x earnings. (no dividend, Analysts' price target: $51.31)

COMMENT

Online gambling. The stock has sold off. He likes the business. One of the trends is local governments allow gambling operations to raise needed cash. He has no issues with the company.

HOLD

They made an acquisition that people didn’t like, which has hurt. Make sure the acquisition doesn’t gum up the works. Watch the numbers and let them guide you. Stock price is reflecting scepticism. Listen to the market on this one.

BUY

It has had a big run-up but has recently pulled back on a weaker quarter. He owns a little bit and likes the trend.

SELL

This stock has broken an uptrend that began in mid 2017. You want to see some sort of consolidation. You can’t tell when a stock has stopped going down until it consolidates for awhile. He doesn’t catch falling knives and would sell at this point.

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The Stars Group Inc (TSGI.TO)