Evolution AB Stock Could 2X In 2025!

Summary

In this video, the speaker highlights Evolution AB (EVO) as a highly undervalued stock with significant growth potential. Priced at only 12–15 times earnings, the stock is well below its historical average despite strong financial performance. With expected double-digit revenue and earnings growth, along with a solid dividend yield and insider confidence, the company is poised for future success. The speaker compares it to past opportunities with PayPal and Sofi, noting that the market often underestimates stocks until they reflect their true value. EVO represents a strong value play for long-term investors.

Takeaways

• 😀 The speaker believes the stock in question has strong potential to double in value by 2025, even without factoring in future growth.
• 😀 The stock is undervalued, currently trading at just 15 times earnings, which is below the market average and its historical valuation range.
• 😀 Despite the stock's underperformance since 2021, the company has seen significant financial improvements, with expected growth in revenue and earnings per share (EPS).
• 😀 The speaker compares the current undervaluation to past situations with PayPal and Sofi, where the market eventually corrected, aligning stock price with financials.
• 😀 The company being discussed is Evolution AB (Evo), which operates in the iGaming industry, providing live casino games to betting companies like DraftKings and William Hill.
• 😀 The stock's valuation has dipped to its lowest levels since its IPO, trading lower than during the 2018 and 2022 market crashes, which the speaker finds perplexing.
• 😀 The company is expected to achieve strong EPS growth of 20% and revenue growth of 16% this year, with projections of 30% revenue growth next year.
• 😀 The iGaming industry is expected to grow at 9% annually from 2024 to 2029, and new market opportunities in Asia, Brazil, and the US could drive further growth for Evolution AB.
• 😀 Despite strong financials, the stock has struggled to reflect this in its price, with a recent earnings report that initially caused a 15% surge before the price dropped back down.
• 😀 The speaker emphasizes the value of Evolution AB as a profitable, low-debt company with a strong balance sheet, a 3% dividend yield, and share buybacks, which add to its appeal as an investment.
• 😀 The speaker remains bullish on the stock, viewing its current price as a buying opportunity, especially in a market where most other stocks are highly valued.

Q & A

What is the main focus of the video?

The video focuses on the stock of Evolution AB (EVO), which the speaker believes is undervalued by at least 2x and has strong growth potential moving into 2025.

Why does the speaker believe Evolution AB is undervalued?

The speaker points to the stock's low current valuation, trading at 12 times forward earnings, compared to a market average of around 20 times earnings. This undervaluation persists despite strong financial performance and growth.

What are the speaker's expectations for Evolution AB's growth?

The speaker expects strong earnings and revenue growth from Evolution AB, with revenue projected to grow 16-30% over the next few years, and earnings per share (EPS) growth around 20%.

How does Evolution AB’s valuation compare to its historical levels?

Evolution AB is trading at its lowest price-to-earnings (P/E) ratio since it became a public company, even lower than during past market crashes, such as the 2018 and 2022 stock market downturns.

What does Evolution AB do in its business operations?

Evolution AB creates live casino games like blackjack, which are outsourced to betting companies like DraftKings, William Hill, and others. Evolution provides the games and takes a cut of the revenue.

What is the potential for growth in the iGaming industry?

The iGaming industry is expected to grow at 9% annually between 2024 and 2029, with key growth drivers including market expansion in Asia, Brazil, and the U.S. as more states legalize iGaming.

What financial advantages does Evolution AB offer to investors?

Evolution AB is a highly profitable business with strong margins (55%), no debt, and significant cash flow, which allows for dividends and share buybacks, offering additional value to shareholders.

How does the market currently perceive Evolution AB's stock?

Despite strong financial performance, Evolution AB's stock has remained undervalued, with limited price movement even after good earnings reports. The speaker notes that there is significant analyst support for the stock, with multiple 'buy' recommendations.

What is the speaker's view on potential risks or concerns about Evolution AB?

The speaker acknowledges concerns from some investors about the stock's growth potential, comparing it to other stocks in the iGaming sector like GNG, but argues that Evolution AB has proven profitability and stability, which sets it apart.

Why does the speaker continue to invest in Evolution AB despite market skepticism?

The speaker believes that Evolution AB’s low valuation and strong financials offer a significant upside, and compares the situation to past experiences with PayPal and Sofi, where undervalued stocks eventually reflected their true value, leading to gains.