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Accel Entertainment, Inc. (ACEL): The Best Small-Cap Casino Stock According To Hedge Funds?

We recently compiled a list of the 7 Best Small-Cap Casino Stocks Hedge Funds Are Buying. In this article, we are going to take a look at where Accel Entertainment, Inc. (NYSE:ACEL) stands against the other small-cap casino stocks.

Global Gambling Industry Overview

The gambling market comprises sales from gambling service-providing companies including casinos, bingo halls, online gaming terminals, and sports betting. According to the Business Research Company, the global gambling market was valued at $540.3 billion in 2023. The market is expected to grow at a compound annual growth rate of 6.6% to reach $744.8 billion by 2028.

Legalization of gambling, rapid urbanization, increased use of social media, and rising internet penetration rate are factors driving market growth. As per the report, the Asia Pacific region is the main contributor in the global betting industry accounting for more than 32.4% of the total market valuation. The Asia Pacific region is followed by North America and Europe. Looking ahead, South America and Africa are expected to be the next hot markets for gambling and casino companies. The South American region is expected to grow at a CAGR of 23.4%, whereas Africa is expected to grow at 8%. Rapid legalization and increasing disposable income in these regions contribute to the growth.

If we look at the segment-wise analysis, the lotteries segment accounts for more than 53% of the total market value and is expected to grow at the fastest rate during the forecasted period.

Emerging Trends in the Gambling Industry

With artificial intelligence and augmented reality on the boom, the gambling industry is also adapting to the trend of introducing immersive gameplay for online gambling games. Many companies are developing extended reality casino games that can be played in multiplayer modes using different devices.

Another hot trend in the industry is the wide acceptance of online casinos, where people can gamble through online games. As per the report the online gambling segment is expected to take off during the forecasted period and gain more than $124 billion. This indicates a strong market opportunity for casino companies to invest in developing interactive online casino games.

Small Caps in a Process of a Multi-Year Bottom

Tom Lee, Fundstrat Global Advisors co-founder and head of research appeared on a CNBC interview on August 16 to talk about the small-cap stocks. Tom Lee believes that the small caps are in the process of a multi-year bottom and believes that they will outperform the market in the upcoming years. While explaining his case, Tom Lee mentioned that small-cap stocks have been trading at a Forward P/E of around 10 with earnings expected to grow and if rate cuts happen during this time it will only benefit the small-cap stocks.

Our Methodology

To compile our list of the 7 best small-cap casino stocks hedge funds are buying, we used the Finviz  and Yahoo Finance stock screener. We selected the Gambling industry to get a consolidated list of stocks. To get small cap stocks we set the filter between $250 million to $2 billion. Next, we selected and ranked the stocks that were the most widely held by institutional investors, as of Q2 2024. The list is in ascending order of the number of hedge fund holders for each stock.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A customer enjoying a game of pool on a tournament-style pool table at a Gaming Terminal establishment.

Accel Entertainment, Inc. (NYSE:ACEL)

Number of Hedge Fund Holders: 14

Market Capitalization as of August 21: $921.38 million

Accel Entertainment, Inc. (NYSE:ACEL) operates gaming machines and devices in bars, restaurants, and convenience stores across the United States. As of June 30, the company owned and operated more than 25,700 gaming terminals across 4,034 locations in Illinois, Montana, Nevada, and Nebraska.

Some of the main business operations of Accel Entertainment, Inc. (NYSE:ACEL) include operating gaming terminals, which are similar to slot machines, Redemption Devices that provide winnings functioning like ATMs, and Amusement Devices such as jukeboxes, dartboards, and pool tables.

Accel Entertainment, Inc. (NYSE:ACEL) is one of the best small-cap casino stocks hedge funds are buying. ACEL was held by 14 hedge funds in Q2 2024, with total stakes worth $165.95 million. Darlington Partners Capital is the top shareholder of the company with a position worth $83.1 million.

The company had a successful second quarter of 2024, with revenue growing 6% year-over-year to reach $309 million. The revenue growth was fueled by an increase in gaming terminals and locations and also based on the increase in revenue generated per location, indicating the strong market presence of Accel Entertainment, Inc. (NYSE:ACEL).

Revenue was not the only financial metric that grew during the quarter, net income also improved 46% year-over-year to reach $15 million. The profitability of the company can be estimated by adjusted EBITDA, which improved by 7% year-over-year to deliver a record $50 million in earnings.

Should you invest in Accel Entertainment, Inc. (NYSE:ACEL)? Here’s the conclusion:

We have already seen how the company delivered record revenue and earnings during its most recent quarter. What we haven’t talked about yet is its growing market presence. Accel Entertainment, Inc. (NYSE:ACEL) was able to grow its business locations by 5% and gaming terminals by 6% year-over-year indicating its growing market share in the industry.

Even if you look at the longer term, you will find that ACEL has been a success story for over the past 5 years. It has been able to grow its top line by an impressive 26% and bottom line by 32%, reinstating its long-term performance and robust fundamentals.

ACEL is also cheap at current levels. It is trading at 13 times its forward earnings, which is an 18% discount to its sector. 3 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $15 presenting a 33% upside from the current level.

Overall ACEL ranks 5th on our list of the best small-cap casino stocks to buy. While we acknowledge the potential of ACEL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ACEL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

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Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
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AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

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One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

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The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
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Trump has made it clear: Europe and U.S. allies must buy American LNG.

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As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

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Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

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The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

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  • The AI infrastructure supercycle
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Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

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Here’s what to do next:

1. Head over to our website and subscribe to our Premium Readership Newsletter for just $9.99.

2. Enjoy a month of ad-free browsing, exclusive access to our in-depth report on the Trump tariff and nuclear energy company as well as the revolutionary AI-robotics company, and the upcoming issues of our Premium Readership Newsletter.

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