The best investing experiences are ones where you buy a stock for dirt cheap then watch it rocket as everyone else catches on after you.
It's all about taking on a stock, representing a sound long-term underlying business, with the maximum risk-reward ratio that you are willing to take on.
The team at Market Matters named one such ASX share recently:
A year to forget
It's not melodramatic to say Star Entertainment Group Ltd (ASX: SGR) has had an awful 12 months.
Multiple government authorities had been probing its business practices to rule whether Star is fit to hold its casino licences.
And the results haven't been flattering, according to the Market Matters memo to clients.
"Moving forward, the expectation is Star Entertainment will receive a hefty fine from the financial crimes watchdog, plus the NSW casino tax is likely to increase."
Regulatory issues aren't the only troubles.
"We heard that its Brisbane Queens Wharf project has again been delayed," read the memo.
"The $3.6 billion resort was due to open before Christmas, but now April 2024 is the new date – until we get close perhaps!"
As such, the Star share price has tumbled 56.5% over the past year, and more than 72% since 1 October 2021.
Yikes.
Next stock price move is likely to be upwards
However, the Market Matters analysts believe the bad news is now baked into the stock price.
"We believe the next 25% for Star Entertainment is far more likely on the upside providing excellent risk-reward for the brave/aggressive investor," read the memo.
"Market Matters likes Star under $1.20 as an aggressive play."
The stock closed Thursday at $1.135 a share.
The analysts believe the NSW government has a huge incentive to not cancel Star's casino licence, nor even hamstring the business excessively.
"The NSW Government is better placed to receive significant revenue from Star Entertainment as opposed to putting them out of business – a sceptical but pragmatic view."
It seems the Market Matters team is not the only one thinking Star could be a sneaky pick-up.
According to CMC Markets, five out of 10 analysts currently think it's a buy.
