Looking for a Lucrative Growth Opportunity?

Strong expansion prospects and an upcoming major sporting event are poised to make Stars Group Inc. (TSX:TSGI)(NASDAQ:TSG) a lucrative investment option.

Discovering companies that have incredible growth potential is one of my favourite aspects of investing, especially when that investment is full of potential that is disregarded by the market.

Stars Group Inc. (TSX:TSGI)(NASDAQ:TSG) is one such investment that is poised to beat the market.

For those not aware of the company, Stars Group is a software company that caters to the growing online global gaming and interactive entertainment industry — more specifically, online poker and casino games.

How much is too much poker?

One of the long-standing concerns that critics of Stars Group have vocalized over the past few years is the over-reliance on poker. PokerStars is still the most renowned brand that Stars Group offers, but that dependency is waning thanks to the company branching out into other areas, such as sports betting and casino games.

Just three years ago, poker games accounted for all of Stars Group’s revenue. Over the course of the recently closed out fiscal year, that number has dropped to 66%, and management is targeting that number to drop further to below 50%.

Moving beyond poker

One of the interesting aspects of online gambling is that there is a considerable opportunity to cross-sell to existing clients into other games, such as sports betting or casino games. Over the course of the past year, revenue in these two non-poker segments saw a 45% increase, culminating in a third consecutive year of over $100 million growth with over 110 million cumulative users registered.

Occasionally a catalyst event comes around that can cause a massive disruption to business as usual. Those events often result in an influx of new clients, who can, in turn, be cross-sold other online gaming segments.

One such catalyst is rapidly approaching — the World Cup.

The World Cup is the largest, most televised sporting event on the planet. Over 190 countries compete in a grueling four-year qualification process that pits the 32 qualified finalists in a month-long competition.

This June finalists will compete in Russia, which will bring a massive influx of sports betting.

This is significant for two reasons.

First, Stars Group typically needs the approval of local authorities to operate in many countries. The company already operates in 18 different jurisdictions around the world, with requests for approval pending in other jurisdictions. Unfortunately, those requests can often take a significant amount of time.

Second, events such as the World Cup are perceived as catalysts to kick-start any pending jurisdictional approvals. This was where Stars Group found itself in during the European competition held two years ago.

Stars Group, which had been known as Amaya, pursued and received approval to operate in several European nations in the weeks prior to the Euro competition, with local jurisdictions more than willing to expedite applications based on the promise of increased tax revenues.

A similar move prior to this summer’s competition seems just as likely.

Even more growth prospects exist

Beyond the lucrative opportunities that exist from the upcoming World Cup, there are other opportunities for growth that should have investors on their toes.

India is the second most populous country on the planet and is also home to over one billion mobile users, many of whom have smartphones. A push to approve Stars Group to operate in that market is underway, which management has stated in the past could result in over $150 million in annual revenue if Stars Group were to penetrate 50% of the online market there, which is not entirely beyond belief.

Stars Group remains, in my opinion, an excellent investment for those looking for a tech stock with significant growth prospects.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned.  

More on Tech Stocks

A shopper makes purchases from an online store.
Tech Stocks

1 Canadian Stock Down 28% That’s Pure Long-Term Gold

If there's one strong stock investors should consider, it has to be this top notch tech stock making a comeback.

Read more »

investment research
Tech Stocks

Best Stock to Buy Right Now: Shopify vs Constellation Software

Let's look at two top Canadian growth stocks and determine which may be the better pick for long-term investors right…

Read more »

3 colorful arrows racing straight up on a black background.
Tech Stocks

1 Canadian Tech Stock Poised for Big Growth in 2025

This Canadian tech stock is one that remains undervalued, so what's next for investors?

Read more »

Canadian dollars in a magnifying glass
Tech Stocks

Billionaires Are Selling NVIDIA Stock and Buying This TSX Stock in Bulk

Forget the tech stocks going through ups and downs and stick to this solid tech stock instead.

Read more »

A person uses and AI chat bot
Tech Stocks

Missed Out on Alphabet Stock? My Favourite AI Stock to Buy and Hold

There are some stocks out there that are popular, and some offer major deals on the market today.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

1 Bright Canadian AI Stock Ready to Surge in 2025 and Beyond

Don't run away from tech stocks, this AI stock could surge this year and beyond.

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

An AI Giant Hiding in Plain Sight: Why Wall Street Is Missing Shopify’s Tech Edge

Shopify (TSX:SHOP) stock is a top Canadian AI play that could break out to new highs in 2025.

Read more »

Abstract Human Skull representing AI
Tech Stocks

Step Aside, Nvidia: This AI Stock Is the Real Deal for Canadian Investors

Canada has several tech companies pivoting to AI, which isn't the same as pure-breed AI stocks, but that's not necessarily…

Read more »