Gumshoe Contest: Do It Yourself Analysis of this 10.6% “Big Yield Hunting” Gambling Stock

Hello, dearest Gumshoe friends — today we’re trying something a little different.

We’ve gotten a lot of requests about the latest pitch from Roger Conrad for his Big Yield Hunting newsletter, teasing that they’re “betting on this 10.6% Big Yield!” … and we’ve got an answer for you, thanks to the speedy and sagacious Thinkolator, but we’ve run out of time to cogitate on the actual stock for you (why? Well, it’s a long story involving James Taylor, the Independence Day Holiday, and a dog who decided that eating half his weight in food would be a good idea at 3am).

We’ll run through the clues, tell you the answer, then you analyze it for your fellow investors — and the best analysis wins a prize (more info at the end).

So here’s the pitch:

“‘Let me entertain you!’

“That’s the rallying cry of this sophisticated $1.5 billion gambling and entertainment company. It’s a world leader in wagering, gaming and Keno.

“More than 300,000 folks place bets on sporting and other events in 2,800 of this company’s outlets. And it also operates 8,500 electronic gaming machines—the highly popular way to gamble nowadays—that are found in licensed hotels and clubs.

“Plus, they have just inked exclusive monopoly licenses to run Keno for another 10 years! Keno is a fun, easy-to-play numbers game that offers the chance to win prizes. You could hit it big with a million-dollar jackpot… or easily double your money. With 3,300 Keno outlets, revenue is in the hundreds of millions.

“Everything about this company screams fun, fun, fun. And even if you don’t like to gamble, you’re going to love locking in a big, double-digit dividend yield for just peanuts.”

So that’s the basic idea — Roger Conrad and David Dittman are recommending a gambling stock that pays a big dividend. A few more clues?

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“Now is the best time to pick up this company—it’s dirt cheap, too! Why?

“In 2007 the stock was trading at almost 3 times its current price. But we all know what happened then—the global economy tanked and solid companies like this went on a downslide.

“It didn’t help that the government in 2008 changed the way it awarded gaming licenses. The company sure took a hit on that one. The stock took a big tumble and continued sliding down until October 2011. It was torture being an investor in the company then. But not now.

“That’s because through the steep decline, the company kept paying out a dividend. And now it’s yielding a whopping 10.6%….

“Recent reports show revenue from its gaming and entertainment endeavors continues to grow. Underlying earnings are healthy, even in these ongoing tough times. Plus, it has a brand-new CEO ready to move the company forward by favorably refinancing maturing debt and securing long-term gambling licenses.”

So we’ll keep it short and sweet today — what Roger doesn’t mention is that this company is Australian (Australians are the world’s leading per-capita gamblers), which does help a bit in sorting out the answer.

But today’s teaser pick, according to the Mighty, Mighty Thinkolator is … Tabcorp Holdings (TAH in Australia, TABCF on the pink sheets). And you can bet that they first wrote about it in mid-May, because that’s when trading volume spiked briefly for the pink sheets shares. It does pay a strong dividend, it is a match for the other clues, and beyond that I must leave you to do the “do it yourself” analysis.

There’s a reward, though: Whoever does the best job of analyzing this company for us in a comment below, in 300 words or less, will get a prize — I’ll send you a 2010 or 2011 proof silver American Eagle coin, worth something like $50-75. So get your analyzing shoes on, get running, and let us know what you think — no other criteria for how you analyze, just tell us what you think of the company’s prospects and why, and I’ll read ’em and decide which comment I like the most. Enjoy!


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Igor V.
Member
Igor V.
July 6, 2012 12:28 am

This is my first time after all years of reading, so please be gentle.
Thinkolator is correct as usual this is-Tabcorp Holdings, from Wikipedia – Australian wagering, gaming and Keno operator and one of the world’s largest publicly listed gambling companies, they carry a supporting media arm.
I am nuts about good dividends , but this company not bringing too much excitement, unless you want to gamble, not invest. Here is my view:
Net Income Avl to Common was -33.93M
Total Debt (mrq):1.04B
52-Week Change3:-10.72%
Shares are traded in range 2.44 (low) to 3.49, so it is less than $5.00 which means that institutional ownership will not be large. Stock traded in a downtrend below 50 day MA and 200 day MA with dismal avg volume about 2300 shares per day, today 1300. Options not available, if you care.
Reviewing Balance sheet and comparing results of 2010 vs 2011:
Net Cash flow went down significantly from 261.9 mln to 147.1 mln
Total assets down, liabilities up.
Dividends paid in 2011 are less than paid in 2010.
It seems that it was a dividends decrease twice from 0.25 to 0.24 in March and 0.19 against 0.25 in September.
Main competitor – Tatts Group Limited has a positive net income and seems much stronger player.
So gamble away at your own risk, you were warned!

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Stuart Watkins
Member
July 6, 2012 6:06 am

You have it all wrong.
This is the way to Jump Start the American economy.
President Obama is said to have send a Special Service detail to Australia to promote this company, because there is no presidential plan in place.
If all Americans put up just $1,000 each, All Americans will start receiving over 10% in return on an annual basis.
This way American will not need a new Stimulus Plan.
That is what the Secrete Service detail detailed.

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Stuart Watkins
Member
July 6, 2012 6:08 am

This is a clever idea and one every true blue American should grasp and grab onto before all the stock is bought up.

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larry williams
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larry williams
July 6, 2012 8:31 am

While dividend yield has gone up; Jan 08 4.79, Dec 08, 5.01, Jun 09 9.08, J un 10 8.69 Dec 10 6.85 Jun 2011 9.21 and Dec 11 was 11.72
Revenue (in millions here)has been for same years; 3.9 , 2.1, 4.2, 2.1, 4.2, 1.5, 2.9 and 1.5 for Dec 11 Interm. Cash is King. Where is the cash going to come to pay the dividends? Thatworries me. Plus the management of the company, while coming from major companies, has flitted back and forth from one company to another.

The stock is currently sporting a 45.3 eps; seems expensive in light of declining or wobbly revenues. Even if they pay 10% a 45 eps could see price crumble 20% so you are a net loser.

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germz
Guest
germz
July 6, 2012 11:08 am

I think this will be a perfect investment because the Australian dollar goes neck and neck with the US $. And after looking at the price history your money invested in this company
can stay for a long time while in the process collecting huge dividends.

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Don Exum
Member
Don Exum
July 6, 2012 12:13 pm

TABCORP ANALISIS: This Australian Stock posts a 15.6 % Div as of last trade 7-06-2012 with 1,400 shares traded.. Stock has a market cap of 2.2 Billion.. Comparing 20 weeks trade closings, beginning July 07, 2011 through December 14, 2011. the average trade closing was $3.03 as compared to July 06, 2012 as $3.08.. This stock is flat moving sideways .. with 20 week low average trade volume of 1,398 shares which confirms static sideways strength.. While the Dividend is inviting, the Risk to reward leaves me with PASS on TABCORP or TABCF on Pink Sheets..

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otradovec
Member
otradovec
July 6, 2012 2:00 pm
Reply to  Don Exum

don’forget the Legas motto: to loose money is fun.

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Ira Cotton
Guest
Ira Cotton
July 6, 2012 1:20 pm

Any analysis based on pink sheet trading of shares in the U.S. is nonsense. These shares primarily trade on the Australian stock exchange and can be bought directly there through certain U.S. brokerage firms (such as Interactive Brokers). Take a look at the trading volumes in Australia for a sense of where the stock is heading and download the company’s annual report from its web site for analysis. Anything sort of that is a waste of time.

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Igor V.
Member
Igor V.
July 6, 2012 2:51 pm
Reply to  Ira Cotton

Ira,
I read company Financial Statement and Balance sheet and it is not looking optimistic to me or inviting to invest in this stock. Unless I am reading wrong, which is also posibility.

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Del Ojo Zafado
Member
Del Ojo Zafado
July 6, 2012 6:44 pm

I do not know about this stock…. but Rodger has picked some decent yield themes in the past. I just do not like the gambling theme for the volatility. I just don’t see it as a reliable yield. Las Vegas Sands has been on a tear again on the Macao and Singapore? casino deals. But a while back it got hammered down just like this stock. I would scan the ABCS, DVYA and EPP portfolios for some decent dividend leaders in Australia that may have suffix (F) symbols trading on the pinks here in the US . Australia is lowering rates so a bond fund would be a more reliable idea. With the ECB going to zero on bank reserves it would seem logical that quite a bit of real money/capital will migrate towards Asia and Latin America in search of yield. Some money market funds in Europe closed on 7/6 due to their surmising they could not reliably defend the unity factor on the Euros deposited there. VNRCF has gotten through a financing as has FRTSF. Those stocks have been rising in price. VVR and EDE seem to continue to be rising and are nice dividend plays with both of them bumping up against the new DUK platform. So they could be takeovers for their market caps. and follow PGN to the block. AGGZF just kept dropping after Roger teased it. Below US$33 it turned out to her a buy. He has pumped Colabor as well but it just can not get any PPS appreciation even while it seems capable of paying the dividend. ..so far. Colabor then continuing to try to tweak their product lines to find those funky things that may appeal and generate more EBITA. Watch out, not all the suffix (F) nasdaq stocks trade at reg commissions. So if this one trades on your brokers platform on the Australian exchange as a foreign stock you could end up with an extra $50 in commissions on top of the reg commission.

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blackjack
blackjack
July 8, 2012 2:08 am

in short tabcorp’s license to operate jackpot machines is up for renew in Aug 2012 – THE Baillieu government is facing a $1.2 billion budget black hole, with gambling giants Tatts and Tabcorp soon to begin legal action to recoup hundreds of millions of dollars in poker machine licence compensation payments they believe they are owed.
The Gov says its not going to pay and so there will be long and costly legal issues – so I would buy shares in the law society before tabcorp.
There has long been an issue with these jackpot machines in that pensioners are paid their monthly allowance by the government and then are bused into clubs where they feed their allowance back into the machines of which the Government gets its cut!
So what goes round comes around.

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