One big reason to invest in Aristocrat Leisure Limited

When I invest in shares, I like to remember the big reasons supporting my investment thesis. I find this quite helpful particularly in volatile markets. It helps me stay grounded, avoid panicking and remember why I invested in the company in the first place.

When I think of Aristocrat Leisure Limited (ASX: ALL), there are many reasons to like this stock but one that sticks out is that it is dominating a high growth market.

That’s not just my opinion, there are various industry surveys coming out and reaffirming this. The gaming industry’s first comprehensive report of slot machine game performance called the Eilers-Fantini report had some interesting stats that got top brokers such as UBS, Macquarie Group Ltd (ASX: MQG) and Goldman Sachs quite excited.

According to UBS, the report which surveyed 374 casinos that operate 397,000 slot machines in North America indicated that Aristocrat achieved 22%  share, which was higher than was expected by brokers. Ship share is the measurement of market share that specific slot manufacturers such as Aristocrat have at casinos.

Compare this to Ainsworth Game Technology Limited (ASX: AGI) which achieved 3% ship share according to the same report. Whilst its not a winner takes all scenario and Ainsworth does have a much lower market cap at $645 million compared to Aristocrat’s $17 billion market cap, it’s still a point worth making.

This is because Aristrocrat is not just dominant but it continues to grow its ship share with UBS stating that customers are expecting to allocate 23% of their ship share to Aristocrat over the next 12 months.

While one report is not enough to base a buy decision on, I think it’s quite interesting such external indicators confirm just how dominant Aristocrat is. In my view, it’s worth considering as part of a diversified growth portfolio.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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