Stars Group (TSX:TSGI)(NASDAQ:TSG) is a Toronto-based gaming and online gambling company. Shares shot up to record highs in the late spring of 2018. This occurred on the heels of the decision by the U.S. Supreme Court to strike down a federal ban on sports betting. Stars Group was one of many gaming companies to celebrate the decision.
The stock spiked early this month after Stars Group agreed to be acquired by Flutter Entertainment in an all-stock deal. Shareholders of Flutter will own approximately 54.64% of the combined company while Stars Group shareholders will own roughly 45.36%.
Stars Group boasted that the move will bolster its ability to expand sports betting, gaming, daily fantasy sports, and poker platforms. There are rumours that Flutter could punt off Paddy Power in order to complete the massive deal.
Stars Group had already been one of my favourite buy-low candidates before this deal. The explosion of legal sports betting in the United States has just got underway, and Stars Group is well positioned to benefit. However, with the recent bump the stock now has an RSI of 68. This puts it just outside of technically overbought territory.
I still like Stars Group, looking long. It boasts a consensus forward price-to-earnings ratio of 9.8, according to Morningstar trusted analysts, and a favourable price-to-book value of 1.3.
Shares are still trading at half of what they were at its all-time high, and a plethora of U.S. states are gearing up for legalization over the next year. Value investors may want to wait for a better entry point, but Stars Group is a growth stock to pounce on soon.
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