Score Media and Gaming (TSX:SCR) or theScore has been one of the hottest TSX stocks in recent months. The company has a unique opportunity at hand, with its front-row seat to the Canadian single-game sports betting market.
Investors have been piling into shares of theScore on news that Canada is to give the green light on sports betting. The Canadian sports betting market is big. It could be worth as much as US$5.4 billion, according to the folks at theScore.
There are many reasons to believe that the market could be even larger, as Canadian gamblers could be stuck at home for many more months, if not years to come, due to COVID-19. While the pandemic will end, many experts agree that COVID-19 isn’t going to be eradicated anytime soon, even if the vaccine rollout goes smoother than planned.
In any case, the hidden gem that is theScore may soon gain the attention of our investor friends south of the border. The company is planning a public listing on the NASDAQ Exchange, and could be a big one amid the increased appetite for explosive growth stocks.
Start nibbling into a position
In numerous prior pieces, I urged investors to give theScore a good look. I’ve been a fan of theScore app for tracking my favourite sports teams. The sports-tracking app’s intuitive interface is among the best on the Apple App Store. And with theScore Bet ready to take the sports-betting scene by storm, I’d look to accumulate shares now, as weak-handed investors throw in the towel because I think theScore stock’s epic climb is not close to being over.
It’s expensive, but it may not be overvalued
Shares were ridiculously expensive at over 100 times sales (that’s sales, not earnings!) at its peak levels. Although the recent 30% pullback makes the stock 30% cheaper, it’s still insanely expensive according to traditional valuation metrics such as the price-to-sales (P/S) ratio. Today, SCR stock trades at 81.6 times sales, making it still one of the priciest stocks you’ll come across in today’s frothy stock market.
Still, there’s a case for putting the name on your speculative buy list on this latest dip. The stock isn’t without its fair share of risks, but I am confident in management’s ability to build a moat around its share of the emerging sports-betting scene. Of course, the stock could easily get in half another several times and still be deemed pricey by most traditional value investors.
Thus far, only one sell-side analyst (or at least the only analyst I can find out there) has coverage on theScore stock. Matthew Lee of Canaccord Genuity recently slapped a $60 price target on the stock, implying over 56% worth of upside from current levels.
theScore stock looks better than Bitcoin or Tesla
Of all the speculative plays out there, theScore is my favourite. While you could still lose a big chunk of your money over the near-term, as this growth-to-value rotation accelerates as a result of climbing bond yields, I still prefer the small-cap growth stock over the likes of cryptocurrencies like Bitcoin or even Tesla.
Both Bitcoin and Tesla strike me as prominent bubbles. I can’t say the same for theScore stock. If you’ve got cash to gamble or invest to the extremely long-term, SCR shares, I believe, are worth betting on at $37 and change, as the odds may be tilted ever so slightly in favour of the investor ahead of its U.S. listing.
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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 Joey Frenette has no position in any of the stocks mentioned. David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla.