r/valueinvesting
Brightstar Lottery down 25% - value play
Author bought the dip on Brightstar Lottery, citing an 8% safe dividend, new contracts, and a rare 'jackpot convergence' for an earnings beat.
- Attractive 8% dividend yield deemed safe by AI analysis, providing strong income.
- Catalysts include a new CEO, secured Italian license, and new contracts driving growth.
- Rare 'jackpot convergence' phenomenon expected to boost casual player engagement and drive an unexpected earnings beat.
- Stock has underperformed significantly, dropping 25% since the start of the year.
- Considered a 'boring' stock with minimal retail interest and low online visibility.
Happy to share so much on this stock, but appreciate a lot of text puts people off from reading. I have had daily conversations with AI pulling in all of their data, utilising public info such as lottery ticket sales and tracking rollover jackpot status.
If you take a look at the share price it is down 25% since the start of the year. I started buying at $13, then $12 and when it dipped below $11 I doubled my investment. It is currently the most I've ever had in one share.
Firstly, it's a boring stock. Pretty much nobody talks about it online, there's a handful of articles, but it is considered a player in the lottery industry, excuse the pun.
Currently an 8% dividend. AI thinks this is a safe dividend payment with no risk of it being cut.
New CEO incoming
Massive Italian license fee paid and secured
New contracts announced this quarter
New contracts going live this year (growth)
Primary markets pushing towards more profitable digital sales.
All of the above (and more) is why I bought in. I'm happy to sit on this and hopefully continue enjoying the dividend.
Why I'm actively recommending now is the chance of a rare lottery phenomenon called jackpot convergence. When a major jackpot rolls over to levels where you hear about it on the news, it attracts the casual player which significantly boosts profits. These players are more likely to play online and also more likely to buy a scratch card or other more profitable product at point of purchase, further boosting the case of an unexpected quarter jump.
This happens when one jackpot rolls over to 'frenzy' levels. Currently there are 3 jackpots on course to hit frenzy levels all near the same time. 2 more weeks of rollovers and this goes from a decent quarter to a surprise earnings beat.
All mine and AI's opinions. Please do your own research. And yes, all 3 jackpots could be won tomorrow, but with the odds and ticket coverage currently that is unlikely. Ask AI to break down the odds of the rollovers continuing and you'll see why I'm so invested in this.
I'm definitely gonna have to model it on an actual spreadsheet, Gemini and Claude's dcf valuation put it at 4x, and in the meantime you get a decent dividend....
No it's not the end when chatbots say X dcf is good, but it's a good screener to see if something is "slightly" undervalued like bsx, ulta, msft maybe or significantly undervalued like Adobe or PayPal...
First pass this seems significantly undervalued... Great find.