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Place Your Bets…

By John Del Vecchio  |  January 16, 2019

The NFL is back.

For a while, it looked as though the league was circling the drain. Lots of controversy erupted over players standing or not standing for the national anthem. Health issues related to brain injuries sucked a lot of oxygen out of the room.

Tensions with players have risen since President Trump entered the fray. And the league didn’t help matters by dealing with these issues in a tone-deaf fashion. TV ratings tanked.

But the worm has turned, and we’re past the critical phase of the Colin Kaepernick kneeling controversy as well as the negativity it brought the NFL.

Indeed, Nike (NYSE: NKE) has scored with Kaepernick as a spokesman, and the company killed it during its latest quarter.

Most importantly, the first two weekends of playoff games have been thrilling for fans.

NFL ratings are back up. For the 2018 season, ratings increased 5% after two consecutive years of declines. In addition, 46 of the top 50 shows in 2018 were NFL broadcasts.

Life is back to normal…

This bodes nicely for one of my favorite investment themes: legalized sports gambling.

Let’s be realistic here. Sports bettors don’t give a rat’s ass about the flag controversy. If it doesn’t affect the point spread, it doesn’t matter.

I have a few friends who are professional bettors. They’re strictly “odds” guys, total cold-blooded killers. I’ve never once had a political discussion with them. They couldn’t care less about Kaepernick. They don’t even have “favorite teams.” And they’re not down for this “fantasy” stuff.

They bet to make money. The NFL is the vehicle to do that. That never changed.

All that bad press about the NFL – the major sport for professional bettors – didn’t help stocks that otherwise stand to benefit from the explosion in legalized betting.

Hidden Profits has two such positions…

One is a casino operator with major investments in technology – including artificial intelligence – that will help it grab market share as legalized sports betting spreads across the country.

I’m very bullish on the AI trend, particularly as it relates to gambling. The combination of massive amounts of data and mobile phones are two key components in making legalized gambling bigger than anything to come down the pike in recent years.

Gaming companies will “push” bets to users. Massive amount of data will allow the gaming companies to suggest bets in real-time during the game.

For example, instead of just betting on the point spread for the team you expect to win the game, you’ll be able to get if they go for it on fourth and one or if the kicker will miss wide right.

All this activity is great for our gaming exposure.

Our second “gaming” play owns the leading platform for making legalized bets. And it acquired the asset before the law changed. That means they made a steal of a deal.

And that investment is massively undervalued. It could move the stock 30% to 50%, quickly.

What’s more, these two stocks are cheap. And that does mean something in a market that’s still priced in nosebleed territory. Despite the butt-kicking during the fourth quarter of 2018, the market is priced dear.

For example, the price-to-sales ratio for the S&P 500 Index has been lower in 18 of the last 19 market tops since the 1950s than it is today.

I’ve often noted in recent weeks that the market is starting to shape up really well for stock-pickers.

And “cheap stocks with huge opportunities” is the recipe for long-term success we follow in Hidden Profits

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John Del Vecchio

John Del Vecchio is the author of the bestselling book, Rule of 72: Compound Your Money and Uncover Hidden Stock Profits and What’s Behind The Numbers: A Guide To Exposing Financial Chicanery And Avoiding Huge Losses In Your Portfolio.

As the in-house stock market guru and forensic accountant for Dent Research, John stood on the shoulders of the great David Tice, James O’Shaughnessy and Dr. Howard Schilit, and built a framework of algorithms and a multi-factor grading system that has made him one of the more successful short-sellers around.

John is also the executive editor of our Hidden Profits newsletter and our trading service Small Cap All-Stars.

He graduated Summa Cum Laude from Bryant College with a B.S. in Finance and was awarded Beta Gamma Sigma honors. He earned the right to use the Chartered Financial Analyst designation in September 2001.MORE FROM AUTHOR