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Monday, April 23, 2018 Stock Pick

Stock Price: $33.30

The Stars Group Inc. provides technology-based products and services to gaming and interactive entertainment industries in Canada and internationally. It owns and operates gaming and related interactive entertainment businesses under the PokerStars, PokerStars Casino, BetStars, Full Tilt and other brands.

This company is shaping up as a potentially massive play. TSG just came onto the radar of a great deal of investors after news hit that The Stars Group agreed to a $4.7 billion deal to acquire Sky Betting & Gaming, a company in England. Sky Bet is the sports betting division of Sky Betting & Gaming. The best part of the deal is that $3.6 billion of it is in cash and the rest stock. Dilution was kept at the minimum possible.

The Supreme Court could decide as early as this week if sports betting will be allowed in more states. New Jersey has claimed that the current laws are unconstitutional. If a favorable ruling comes through then several states could legalize betting on all kinds of sports. The NBA is open to state-by-state wagering and eventual national sports betting.

TSG will be as well placed to take advantage of a Supreme Court ruling as anyone. The company trades at a $4.74 billion market cap with revenue last year of $1.31 billion and a profit of $259 million. TSG generated cash flow of $225 million last year. The company has shown growth, and doesn’t need a favorable ruling, but a favorable ruling would certainly be the best case scenario in the short-term for TSG.

Speculative Score: 10

1 Being the Least Speculative and Most Confident

10 Being the Most Speculative and Possibly the Most Risky

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