Private Client call & 1 on 1s with Adams Resources & Energy (AE) Wednesday, April 14 9am-12 PDT

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Private Client call & 1 on 1s with Adams Resources & Energy (AE) Wednesday, April 14 9am-12 PDT

 

Join us for a webinar on Apr 14, 2021 at 9:00 AM PDT.

 

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Please join us for a private client call and 1 on 1s with CEO Kevin Roycraft of Adams Resources & Energy, Inc. (AE) on Wednesday, April 14 at 9 am PDT. Individual 1 on 1s will take place from 10 am to 12 pm PDT.

Adams Resources & Energy, Inc. (AE) is primarily engaged in the business of crude oil marketing, transportation, and storage and tank truck transportation of liquid chemicals and dry bulk through its two wholly owned subsidiaries GulfMark Energy, Inc. and Service Transport Company.

Adams Resources & Energy Inc is a play on the improving outlook for crude oil prices as vaccine rollouts increase optimism on a global economic recovery. We believe both AE’s businesses, supported by two recent acquisitions, are well-positioned for growth heading into 2021. We are bullish on AE's growth prospects and our price target is $39.75.

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Vegas Ready To Recover From Pandemic: Now It's A Stock Picker's Game

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Vegas Ready To Recover From Pandemic: Now It's A Stock Picker's Game

Singular Research: Staff

 

Summary

  • Our gaming index imploded, but it then bounced back to the record-setting territory.
  • Pent-up demand from many Americans has caused the gaming industry to see an uptick in customer demand.
  • with 20 U.S. jurisdictions open to sports betting, aggressive marketing efforts are sure to continue converting customers to betting online.

 

vegas airport

(Airline traffic has steadily increased at McCarran International Airport in Las Vegas.)

 

It's only a five-mile stretch of Las Vegas Boulevard, but when the Strip shut down for the coronavirus pandemic in March 2020, it was as if the entire city had turned out the lights. The party's over.

Normally packed with tourists and traffic, Las Vegas' resort corridor - developed with $40 billion of casino infrastructure - looked more like the ghost towns that dot Nevada's historic mining landscape.

Our gaming index imploded, but it has since bounced back to record territory.

COVID-19 exacted a heavy toll on U.S. commercial gaming revenue, which plunged 31 percent in 2020, the first market contraction since 2014, according to the American Gaming Association.

The industry managed to survive by partially reopening casinos and getting a boost from legalized sports betting. Some gaming analysts are optimistic that the worm has turned.

Strip-exposed equities such as MGM Resorts (MGM) and Caesars Entertainment (CZR) have fully recovered and surpassed 52-week highs. MGM is up 18.9 percent from a year ago at $37.48 a share, and Caesars is more impressive, up 26.8 percent at $93.78, as of March 10.

Local favorites Boyd Gaming (BYD) and Red Rock Resorts (RRR) also have recovered, up 36 percent and 25.6 percent, respectively.

Las Vegas Sands (LVS) and Wynn Resorts (WYNN), which generate a considerable amount of revenue from Macau, have both undergone recent changes in leadership, and linger 30-40 percent below pre-pandemic highs.

Penn National (PENN), with its oversized investments in the spread of legalized sports gambling and iGaming, leads the pack, up nearly 200 percent from pre-pandemic highs.

 

Optimistic outlook

With the nationwide rollout of COVID-19 vaccinations and declining cases, deaths and hospitalization rates, the gaming industry is beginning to see an uptick in customer demand, the pent-up demand that many Americans have been waiting to unleash.

"The leisure customer will return to Las Vegas in a shorter time period than the business customer as we continue to emerge from the Great Shutdown," says Brendan Bussmann, government affairs director at Las Vegas-based Global Market Advisors.

"One of the keys to this, though, will be keeping good (airline) lift into the market because the leisure customer is still looking for deals and capacity is somewhat still constrained as airlines try to recoup losses."

Passenger traffic at McCarran International Airport, a key economic indicator for Las Vegas, dropped precipitously from 3.8 million in February 2020 to 152,470 in April 2020, then steadily climbed back to almost 2 million in October. January's count was 1.5 million.

Bill Miller, chief executive officer of AGA, feels upbeat about the second half of this year. "As vaccines roll out, people will be excited to travel, hungry for entertainment, and desperate to get out and have fun again. That's an environment where gaming will thrive."

Recovery of the gaming index confirms his view. Even as visitor growth flattened in Las Vegas before the pandemic, tourists were still interested in traveling to the city, though they may not have made the trip.

 

Betting app converts

While Las Vegas casinos took a major blow in 2020, online sports betting, Internet casino games and esports blossomed and show no signs of withering, even as casinos reopen around the country.

DraftKings (DKNG) and Fan Duel have flooded TV airwaves with app advertisements in states that legalized sports betting, and newcomers such as BetMGM, Skillz and Barstool are knocking on the door offering new products that enhance and advance the betting experience.

With some 20 U.S. jurisdictions open to sports betting, aggressive marketing efforts will continue to dominate the scene as operators compete for market share, Global Market's Bussmann said. Sports books across the country are converting customers to betting online.

"While these (apps) will win over the local market, there is still nothing that replaces the experience that Las Vegas offers during sporting events," he asserts. "The experience will never be lost even as sports betting spreads across the U.S."

Bally's Corp. (BALY) seeks a larger stake in the burgeoning esports segment, offering $100 million to acquire Allied Esports Entertainment, which follows last year's "skin" partnership with Esports Entertainment Group (GMBL).

Other than HyperX Esports Arena at Luxor hotel, esports has yet to gain traction in Las Vegas. Still, Bussmann sees the industry growing in terms of exposure, sponsorship, fan engagement and eventually wagering.

"While we have not seen as strong success as some would like in esports with casinos, we will eventually start to see a better blend as some of these esports are allowed to have wagers placed on them, depending on the jurisdiction," the gaming analyst said.

 

Stock Picking But With The Houses Edge

Esports has exploded in popularity over the past decade and is predicted to continue growing at an explosive growth partially from COVID-19 lockdown fears. Now here comes the houses edge, Esports Entertainment Group (GMBL) is the only eSports-focused wagering platform.

While Esports Entertainment Group has a huge focus on eSports, this isn't to say management is naïve. Management actually has a well thought-out business strategy to eventually branch into all areas of online gambling. From these factors and many others, we have a current price target of $20 a share.

 

If the houses edge wasn't good enough, what about being able to count cards?

Less metaphorically speaking here, another great beneficiary in the online gambling arena is Golden Nugget Online Gaming (GNOG). For starters, Golden Nugget Online Gaming is majority owned by Tilman Fertitta, one of the best jocks as a CEO one could ask for.

Not only does Golden Nugget Online Gaming benefit from having access to the Golden Nugget Casino database but also to the entire Landry's restaurant network. Over 600 restaurants around the United States will be miniature billboards for Golden Nugget Online Gaming.

One could argue these miniature billboards are not effective but simply put, Golden Nugget Online Gaming has almost 3x the average customer lifetime value as DraftKings. From these and other factors, we consider a fair value for Golden Nugget Online Gaming to be $24 a share.

 

202002 gaming index

Source: Singular Research Estimates

 

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Join Us for Private Client Call w/ BIGG Digital Assets (BBKCF) CEO Mark Binns on Mar 25, 2021

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Private Client Call with BIGG Digital Assets (BBKCF) CEO Mark Binns 9am-10 PST, Thursday March 25

 

Join us for a webinar on Mar 25, 2021 at 9:00 AM PDT.

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Please join us for a private client call with CEO Mark Binns of BIGG Digital Assets Inc. (BBKCF) on Thursday, March 25 at 9 am PST.

BIGG Digital Assets Inc. owns and operates cryptocurrency related businesses. It owns two operating companies: Netcoins, a cryptocurrency brokerage, and Blockchain Intelligence Group, a suite of forensic and analytic solutions to mitigate risks associated with cryptocurrency transactions.

BIGG operates an online cryptocurrency brokerage as well as cryptocurrency risk intelligence solutions. Both of its operating businesses have experienced significant increases in product demand over the past several months. As a result, BIGG has now achieved positive cash flow from its monthly operations. The cryptocurrency risk intelligence market is multi-billion dollar in size and has very few competitors. The barriers to entry are remarkably high. BIGG is well positioned to take a significant share of the market in coming years.

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Active Coverage Report Preview: VYGVF (03/10/2021)

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Active Coverage Report Preview: VYGVF (03/10/2021)

 

The company announced record Q2:21 revenue of $3.6 million. In February, the company experienced rapid growth surpassing $1.7 billion in AUM and $20 million in monthly revenues. We are bullish on VYGR’s long-term prospects. We maintain our BUY rating and increase our target price to $23.50 per share (earlier $13.00).

VYGVF report 03 2021

 

Q2:21 Highlights

  • Revenues increased 3,949% YOY to approximately $3.6 million for Q2:21 compared to $88,146 for Q2:20.
  • Assets under management (AUM) surpassed $230 million at the end of December 2020, up from $5 million at the end of December 2019, representing a 45x increase over that period.
  • Management noted that their preliminary revenue grew to ~$20 million as of February 2021.
  • Voyager's AUM continues to grow exponentially, as well as the growth of daily net deposits and new accounts on the platform. Given the dramatic increase in AUM as well as trading velocity, we increase our estimates.
  • We maintain our Buy rating and increase our target price to $23.50, implying a price appreciation potential of 56%.

 

PRIMARY RISKS

  • Voyager frequently has acquisitions. Failure to integrate any acquisition could result in additional risk and uncertainty for the business.
  • Crypto-related businesses face a very uncertain regulatory environment. There is high ambiguity and lack of clarity from many governments globally. Any unfavorable change could negatively impact operations.

 

buy active coverage report 2

Singular Research February 2021 Director's Letter

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Singular Research February 2021 Director's Letter

 

In February, Covid vaccinations started to roll out throughout the world with more than 239 million vaccinations administered globally. However, the story of month had more to do with inflationary fears and rising bond yields. With U.S. economies re-opening, talks of fiscal stimulus, and a pledge from Federal Reserve Chairman Powell to keep interest rates low to spur economic growth, investors have been moving more into equities and selling bonds. On Thursday, February 25, the yield on the 10-year Treasury hit 1.60% which was higher than the S&P 500 dividend yield, before settling at 1.42% the next day. As a result of rising yields, investors became more cautious of growth and technology stocks, looking favorably instead on energy and value stocks; WTI and Brent were up 17 and 20% for the month. The market path to life after the pandemic has been bumpy as investors look beyond a “stay at home” trade to a “re-opening” trade.

The February Purchasing Managers Index® (PMI) registered 60.8 percent, an increase of 2.1 percentage points from the January reading of 58.7 percent. Similarly, the Conference Board Leading Economic Index® (LEI) increased 0.5 percent in January to 110.3 (2016 = 100), following a 0.4 percent increase in December and a 0.9 percent increase in November. Both the PMI and LEI increased which suggests investors and businesses are encouraged by vaccinations and reopening plans. The unemployment rate was little changed at 6.2% in February (6.3% in November) as businesses have started the rehiring process.

 

Singular Directors Letter February 2021 img 1

 

For the month of February, the Singular coverage list continued to outperform the S&P 500 and Russell 2000 by 1,103 and 773 basis points, respectively. Over the last twelve months, the Singular coverage list outperformed the S&P 500 and Russell 2000 by 4,844 and 3,266 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 561 and 456 basis points, respectively.

 

Singular Directors Letter February 2021 img 2

 

 

For February, VYGVF had a great month as their AUM and trades surpassed $1.1 billion and one million, respectively. GMBL also had a stellar month as the firm reported strong Q2 results with the acquisitions of Lucky Dino, Helix eSports, and ggCircuit. Similarly, MGNI excited investors with their fourth quarter year-over-year revenue growth of 69%. NAK was a top performer for the month as investors anticipated positive news from their request for appeal of the Pebble Partnership.

 

Singular Directors Letter February 2021 img 3

 

EBIX was our worst performer for the month as their auditor, RSM U.S. LLP, resigned because of “unusual transactions” in their gift card business; however, since then EBIX has brought on a new Indian auditor to complete their 10K filing by the end of April. We view this selloff as a buying opportunity. BYND reported weaker than expected fourth quarter earnings as the company’s foodservice business is still negatively affected by the pandemic. Interestingly, the company signed deals with McDonald’s, Pepsico, and Yum! Brands which should bolster growth once the pandemic subsides. GNOG and IEC had strong months but were largely the victims of a broad market selloff. TA announced fourth quarter results that were weaker than expected.

For the month, we initiated coverage on AE and GNOG. AE is primarily engaged in the business of crude oil marketing, transportation, and storage and tank truck transportation of liquid chemicals and dry bulk through its two wholly owned subsidiaries GulfMark Energy, Inc. and Service Transport Company. GNOG operates online gaming and sports betting in the U.S. under the Golden Nugget brand. The company maintains an 8% market share in New Jersey’s iGaming industry, the most mature market in the U.S., and has also launched iGaming in Michigan, Pennsylvania, and West Virginia.

 

Singular Directors Letter February 2021 img 4 

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Singular Research's Emerging Growth & Value Alpha Leaders Webinar

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Singular Research's Emerging Growth & Value Alpha Leaders Webinar 2/25 6:00am - 4:00pm PST

Join us for a webinar on Feb 25, 2021 at 6:00 AM PST.

 

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Emerging Growth & Value Alpha Leaders Webinar

Thursday, February 25:
7:45:  Hut 8 Mining Corp. (HUTMF) Ms. Jaime Leverton CEO & Director
8:30:  Esports Entertainment Group, Inc. (GMBL) Mr. Grant R. Johnson CEO, Chairman, Pres, Sec. & Treasurer
9:15:  BIGG Digital Assets Inc. (BIGG.CN) Mr. Mark Binns CEO & Director
10:00: Voyager Digital Ltd. (VYGR.CN) Mr. Stephen Ehrlich Co-Founder, CEO & Director
10:45: Northern Dynasty Minerals Ltd. (NAK) Mr. Ronald William Thiessen Pres, CEO & Director
11:30: Acme United Corporation (ACU) Mr. Walter C. Johnsen Chairman & CEO
12:15: TBA

Prospective Presenting Companies Include:

Voyager Digital Ltd. (VYGVF)
Bigg Digital Assets Inc. (BBKCF)
Silvercrest Asset Management (SAMG)
Esports Entertainment Group Inc. (GMBL)
Kirkland's Inc. (KIRK)
Ebix Inc. (EBIX)
Northern Dynasty Minerals Ltd. (NAK)
A-Mark Precious Metals Inc. (AMRK)
IEC Electronics Corp. (IEC)
Acme United Corporation (ACU)
L.B. Foster Company (FSTR)
Olympic Steel Inc. (ZEUS)
IRadimed Corp. (IRMD)
Emergent Biosolutions (EBS)
Banco LatinoAmericano (BLX)

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SportCaller adds to Bally’s online gaming offerings

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sport caller

 

SportCaller adds to Bally’s online gaming offerings

Bally’s Corp. (NYSE: BALY) acquired free-to-play game provider SportCaller on Feb. 8 in a deal that expands the company’s online gaming and interactive entertainment platforms. Financial terms were not disclosed.

With locations in Dublin, London, and Philadelphia, SportCaller’s core products consist of prediction, quiz and trivia games, pay-to-play, bespoke and turnkey app games. They are aimed at gamers in North America, Europe, Asia, Australia, Africa and Latin America.

SportCaller will allow Bally’s to use free-to-play (F2P) games to engage and retain more players in states that authorize sports betting.

“We believe that the SportCaller acquisition will significantly improve our competitive position within the U.S. online sports betting and iGaming industry,” said Adi Dhandhania, vice president of strategic transactions and interactive development for Rhode Island-based Bally’s.

Covering more than 30 sports in 37 countries, the platform is expected to considerably expand Bally’s presence beyond the United States. It will allow Bally’s to launch its own suite of F2P games and increase Bally’s player database, the VP added.

More importantly, SportCaller bolsters Bally’s recent acquisitions of Bet.Works and Monkey Knife Fight. Last year, the company formed a partnership with Esports Entertainment Group (GMBL), an online gambling platform that started with video games. Bally’s also partnered with Sinclair Broadcast Group for branding regional sports networks.

“These transactions, while diversified, are quite complementary, and each one represents a crucial step in our evolution to become a leading omnichannel gaming provider,” Dhandhania said. They position Bally’s to provide an “unparalleled gaming experience” for sports fans across the United States and beyond.

Bally’s Corp., formerly Twin River Worldwide Holdings, has developed a calculated long-term growth strategy toward becoming the first truly vertically integrated sports betting and iGaming company in the nation, he said.

A symbiotic relationship exists between online sports betting and traditional casino sportsbooks, which provides Bally’s with a “material advantage,” Dhandhania noted. Bally’s owns and operates 11 casinos in seven states, including the flagship property in Atlantic City, N.J.

According to some analysts’ projections, online sports betting and iGaming is expected to reach $12 billion by 2025 and $50 billion at maturity.

That presents an “incredible opportunity” for Bally’s, given the differentiated components within the company’s interactive gaming division, Dhandhania said.

gaming index jan 2021

 

-Singular Staff

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Sports betting breaks records during pandemic

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Sports betting breaks records during pandemic

Esports Entertainment, Draftskings Inc and Skillz Inc well positioned for long term upside

 

Sports betting breaks records during pandemic img 1

(Sports betting action has been brisk at South Point casino in Las Vegas.)

 

Even as the coronavirus pandemic ravages the nation, sports bettors found their way to casinos and mobile betting apps, setting records in November for monthly handle in several states, according to the American Gaming Association.

New Jersey, which surpassed Nevada in August as the No. 1 state for sports betting, took in $931.6 million in wagering in November, marking its fourth straight month of record-breaking numbers.

Pennsylvania hit a record $538 million in December sports wagering, up 60 percent from December 2019, and Iowa topped $100 million for the first time. Other states with record handle include Colorado, Indiana, and Rhode Island.

Sports betting has emerged as a gainer in the U.S. economy battered by the pandemic that forced more than 900 tribal and commercial casinos across the country to shut down for months.

Most have reopened with reduced capacity and other restrictions to mitigate the risk of spreading the virus.

“Sports betting at the South Point is better than ever,” says Michael Gaughan, owner of the Las Vegas casino-hotel and son of gaming pioneer Jackie Gaughan. “If we were not closed for three months, this would have been the biggest sports year ever.”

The pandemic has made it quite difficult to handicap and bet sports, Gaughan added. Games have been cancelled, players are missing games after testing positive or being exposed to the virus, and, to some extent, the absence of fans reduced home field advantage.

“Nevada sports win percentage has never been higher. The bettors have had a tough year so far,” Gaughan said.

Sports betting revenue was bolstered by a crowded sports calendar that included the NBA Finals and World Series in October, along with the NFL and college football seasons.

Consumer interest was strong in new legal betting markets in Colorado, Illinois, Michigan, and Washington, D.C. In total, Americans wagered a record $5.95 billion in the third quarter, generating $352.3 million in gaming revenue – the second-highest quarterly total ever.

 

Online growth

Internet gaming grew to $435 million during the quarter, in part due to the proliferation of mobile sports betting apps such as Draft Kings (DKNG), Fan Duel and William Hill (WIMHY). Draft Kings is the leading pure play on the space and

we believe 30-35% growth in revenues and earnings  will be achieved over the next five years and have a $62 price target over the next twelve months.  

That trend is expected to continue in the post-pandemic world where people conduct more of their business from home.

Casinos are partnering with software technology companies that offer secure access to mobile sports wagering platforms, ultimately threatening the bottom line of the traditional sports book.

“So far, I believe it has not really affected Vegas sports betting,” South Point casino owner Gaughan says.

While third-quarter sports wagering results are promising, a full recovery is dependent on continued public health measures to control the virus, said Bill Miller, CEO of the Washington, D.C.-based American Gaming Association.

Most casinos are operating at limited capacity, requiring temperature checks for entry and that face masks be worn at all times, except when eating or drinking, and the fear of contracting the virus has kept many bettors at home.

 

Esports threat

Esports, or electronic gaming, has carved out an explosive niche in sports wagering that may be poised to overtake traditional sports such as baseball, football, basketball, and hockey.

We believe one of the big stories of 2021 will be the continued investment outperformance of the esports and gaming sectors led by DraftKings (DKNG), Esports Entertainment Group (GMBL) and Skillz (SKLZ), each with dominant market shares, excellent management teams and attractive growth rates.

“We feel investors will flock to these new high-growth, underinvested industries in an environment of low inflation and low interest rates,” says Robert Maltbie, president of Singular Research. We have a current price target of $8.00 on Esports  (GMBL) driven by its 90% top line growth rate expected through 2022.

Esports Entertainment closed its acquisition of Esports Gaming League in January, strengthening the company’s three-pillar growth strategy.

“EGL technology underpins the esports programs for some of the world’s best-known sports franchises, including the L.A. Kings, Philadelphia Eagles and Arsenal Football Club,” Esports Entertainment CEO Grant Johnson said in a company statement. “We plan to build on this strong foundation moving forward, driving near-term revenue growth and long-term shareholder value improvement.”

Gaughan confesses that he is not deeply familiar with esports, though he doubts it will ever surpass regular sports betting in his lifetime.

“However, I never thought they would take the handles off the slot machines,” the gaming executive said. “For the most part, it seems to me to be unregulated. If people wanted to bet on it and it made sense, I might put it on the (sports book) board. As of right now, I have no interest.”

 

Growing appetite

With 18 states having legalized sports betting since the landmark 2018 U.S. Supreme Court ruling in Christie v. NCAA and four more states jumping on board, wagering amounts will continue to increase, exceeding analysts’ expectations and taking the industry to a level of vast investment opportunity. The global sports betting market is expected to reach $155 billion by 2024.

Virginia recently opened the door for Draft Kings, allowing residents to put money on the Super Bowl, the largest betting event of the year. FanDuel also launched in January and BetMGM is on the way.

This domino effect is bringing legalized sports gambling to North Carolina, Tennessee, and Washington, and we expect that other states will explore legislation that can add tax revenue to budgets in crisis. Some states such as California are struggling to approve online sports betting because of political opposition and tribal agreements.

 

Sports betting breaks records during pandemic img 2

 

Robert Maltbie, CFA

President, Singular Research

818-222-6915

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