In his SmallCapPower.com interview on June 13, 2013, 5i Research Founder & CEO Peter Hodson recommended investors take a look at shares of Amaya Gaming Group Inc. (TSX: AYA). Its stock at the time was trading at $6.35 a share, and has soared 259% since to its recent price of $22.81.
Amaya provides a variety of gaming products and services including casino, poker, sportsbook, platform, lotteries and slot machines. Some of the world’s largest and best known gaming operators and casinos are powered by Amaya’s online, mobile, and land-based products.
Mr. Hodson liked the company at $6.35 a share, even more so than when it was at $2, due to that fact that it acquired competitors Cryptologic and Chartwell Technologies, as well as Cadillac Jack, which produces the gaming hardware for casinos. At the time, he said “it was a tiny company that has come out of nowhere. Its revenue growth is massively accelerating and they’re profitable … and they are positioned perfectly for future growth.”
On June 12, 2014, however, Amaya Gaming made what many considerto be a game-changing acquisition of Rational Group Ltd., the world’s largest poker business and owner and operator of the PokerStars and Full Tilt Poker brands, for US$4.9 billion in cash. PokerStars and Full Tilt Poker have more than 85 million registered players on desktop and mobile devices, controlling about 65% of the global online poker market outside of the United States. The acquisition will be partly financed by about $2.9-billion in debt.
Clarus Securities analyst EyalOfir, in a recent Financial Post interview, said he sees more upside in Amaya shares and has raised his target price on the stock to $36.He expects Amaya will generate approximately $2.50 per share in earnings by 2016 and will be able to quickly pay downdebt with its growing cash flow.
“While the European market is relatively saturated, Amaya’s purchase of PokerStars potentially accelerates the PokerStars brand into the U.S. market under new ownership,” he told the Financial Post. “The U.S. online gaming market represents the most significant growth opportunity for the industry.”
Amaya Gaming Group is included in SmallCapPower.com’s Expert & Analyst Top 20 Stock Picks, which was launched on January 22, 2014. Since that time, Amaya’s stock price has powered 194% higher.
See the other 19 Top Stock picks here.
