My #1 Stock For 2025

Summary

In this video, the speaker reveals their top stock pick for 2025: Evolution AB. A leader in the live casino industry, Evolution AB is positioned for significant growth in North America and Latin America. Despite solid financials and impressive profit margins, the stock is undervalued at 13x earnings, offering potential upside. The speaker highlights the company's consistent revenue growth, strong market presence, and future expansion opportunities, while addressing risks such as regulatory concerns in the UK. Overall, Evolution AB is seen as a high-conviction investment with the potential for substantial returns in 2025.

Takeaways

• 😀 Evolution AB is the number one stock pick for 2025, with the highest conviction for strong performance next year.
• 😀 The stock has underperformed in recent years, down 31% from its peak, but this creates an attractive buying opportunity.
• 😀 Evolution AB operates live casinos for major platforms like DraftKings and William Hill, which is a profitable 'picks and shovels' business model.
• 😀 The stock is currently priced at 13x earnings with a 4% dividend yield, making it appealing for both growth and dividend investors.
• 😀 The U.S. iGaming market presents significant growth potential for Evolution AB as more states legalize online gambling.
• 😀 Despite a slight dip in stock price due to a UK Gambling Commission investigation, this issue only represents 3% of their revenue and is not a major concern.
• 😀 The company's financials are strong, with 27% revenue growth and profit margins of 55-58%. It also has a debt-free balance sheet and is actively buying back shares.
• 😀 Insider buying has been strong, with the CEO purchasing around £9 million worth of shares in 2023, signaling confidence in the stock.
• 😀 Evolution AB is trading at a historically low valuation, making it an interesting opportunity for investors looking for undervalued stocks.
• 😀 The stock has significant upside potential, with estimates of 90% to 300% upside based on its current price and future growth prospects.
• 😀 The company has delivered strong financial results in the past, and despite market skepticism, it remains well-positioned for future growth, especially as more U.S. states embrace iGaming.

Q & A

What is the primary focus of the video?

The video focuses on the creator's number one stock pick for 2025, Evolution AB, which they believe will perform well in the coming year.

What were the previous stock picks mentioned in the video?

The previous stock picks were PayPal for 2024, which increased by 43%, and DraftKings for 2023, which saw a 200% return.

Why did the creator choose Evolution AB over AMD for their 2025 pick?

The creator felt Evolution AB had the edge over AMD, but didn’t go into specifics regarding why AMD was considered a close contender.

What business model does Evolution AB operate on?

Evolution AB operates a business model focused on providing live casino and gaming services to other platforms like DraftKings and William Hill, taking a cut for their service.

What is the significance of Evolution AB's dividend yield?

Evolution AB offers a 3.7% dividend yield, which is rounded up to 4%, making it an attractive option for dividend investors.

What are the key markets where Evolution AB is growing?

Evolution AB is growing in Europe, North America, and Latin America. North America is especially expected to be a major growth driver in the coming decade.

What was Evolution AB's valuation compared to its historical earnings multiples?

Evolution AB is currently valued at around 13 times earnings, which is significantly lower than its historical valuation of around 35-40 times earnings before the COVID-19 pandemic.

What concerns are mentioned regarding Evolution AB's stock price?

Concerns include competition in the industry and potential regulatory issues, such as an investigation by the UK Gambling Commission, but the creator believes these issues will not significantly affect the stock in the long term.

How has Evolution AB's financial performance been recently?

Evolution AB has shown strong financial performance with 27% revenue growth in Q3, and operating revenues up 20%. The company's profit margins are also solid, at 55%.

Why does the creator believe the stock is undervalued?

The creator believes the stock is undervalued because it hasn't reflected the company's strong financial growth, good profit margins, and potential for future growth, despite these positives.

What future growth potential does Evolution AB have according to the creator?

The creator believes Evolution AB has significant growth potential, especially with the expansion of iGaming in North America and Latin America, and the possibility of more U.S. states legalizing iGaming.