We haven’t discussed ALL for a while and although we entered at reasonable sub $40 levels back in January the stocks kept slipping away and it’s now trading around 20% below its post COVID level. The companies certainly suffered from the markets sell-off in growth stocks but an Est P/E of 20x for this year and a reliable albeit small dividend poses the question, has the stock fallen too far or is there something wrong under the hood, MM doesn’t think so:
- We believe the company should deliver a strong half-year result later this week but as we’ve seen with the sector through 2022 if it’s a touch off the mark ALL will find itself trading well under $30.
- The company is positioned strongly for both organic growth and M&A opportunities as it sits on a $1bn cash war chest.
- Sentiment towards anything growth might be poor at present but MM believes this is an excellent long term story with mobile game penetration one exciting avenue.
We believe this is one of the best low valuation techish stocks on the ASX with the downside looking increasingly limited when we consider its gaming machine / digital businesses plus above-mentioned cash on the balance sheet.
MM believes the next 20% for ALL will be up
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