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Looking for Explosive Growth With a Modest Price tag? Stars Group Inc. (TSX:TSGI) Has You Covered!

When it comes to opportunities brought forth by nationwide legalization, many investors immediately think of pot stocks and Canada’s imminent legalization that’s just months away. Valuations in the industry, however, are concerning and the ridiculous amounts of volatility are enough to keep even the most aggressive of investors on the sidelines.

The sin stock I’m about to present to you today has explosive and potentially unfathomable growth potential that’s comparable to that of the marijuana industry minus the absurd multiples that come with them.

As you may have guessed, I’m talking about Stars Group Inc. (TSX:TSGI)(NASDAQ:TSG), which has been one of the hottest Canadian stocks of late, nearly doubling over the past year. That’s appreciation fit for a speculative pot stock, but believe it or not, Stars Group is still attractively valued when you consider the potential growth opportunity and the cloud of uncertainty that’s partly evaporating following the recent ruling by the U.S. Supreme Court. The ruling gave the green light on nationwide legalization of sports betting on a state-by-state basis.

As the floodgates are essentially poised to be open in the U.S., Stars Group has an opportunity to go all-in on sports betting in three major international markets in the U.S., the U.K., and Australia, as the company puts its foot on the pedal in order to diversify from its poker segment.

With the recent $4.7 billion acquisition of U.K.-based Sky Gaming and a smaller ~$100 million acquisition of a sports betting firm in Australia, Stars Group could be one of the dominant forces in the global betting scene. If it’s able to thrive as it has with its poker segment over the last decade, I believe there are few (if any) headwinds that will be able to slow Stars Group’s impressive momentum over the foreseeable future.

Like marijuana, I believe the taboo surrounding online gambling (including sports betting) is gradually beginning to fade at the international level. This is an extremely long-term tailwind that could fuel many years of appreciation.

Assuming Stars Group executives stay out of trouble, I think investors ought to get some skin in the game today by placing a small bet with the intention of placing additional bets down the road in the event of a market-wide pullback, which will be nothing more than a gift from Mr. Market.

Despite Stars Group’s impressive rally, the stock trades like a value stock with a ~14 times forward earnings and a 2.3 P/B. Although there are still many uncertainties, I think the risk/reward trade-off is attractive and would have no hesitation recommending shares at these levels.

Stay hungry. Stay Foolish.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned.

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