This ASX stock has halved in 6 months. It could be a bargain buy

Remember, what the share price did in the past has nothing to do with what it could do in the future.

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Just because a stock has fallen off a cliff doesn't mean it is a bad buy.

That's because the past has nothing to do with future performance. And the outlook for the business from this point on could be rather bright.

Maybe there has been a change of strategy, where a struggling business unit has been cut loose. Perhaps a change of management. Or even the stock has fallen so far that it's now close to what the assets are worth.

Securities Vault co-founder Nathan Lodge this week noticed that one ASX stock that has plunged 54% since early September is now looking ripe to buy.

Let's check out his reasoning:

The ASX stock winning on multiple levels

Lodge describes Pointsbet Holdings Ltd (ASX: PBH) as a corporate bookmaker that runs a "cloud-based wagering platform".

"The company has operations in Australia and Canada," Lodge told The Bull.

"This company is well managed. It also communicates well with investors."

Most of the last few months' losses in the share price came on just a single day in September, after Pointbet sold off its US business.

The company had announced that proceeds from that sale would be distributed to investors who were shareholders on 5 September. So on 6 September the stock plunged roughly the equivalent of the capital return.

And now, with an unprofitable venture no longer weighing the business down, Lodge reckons it's all onwards and upwards.

"In Australia, it posted a total net win of $59.5 million in the second quarter of fiscal year 2024, up 3% on the prior corresponding period. 

"The total net win in Canada was $10.5 million, up 109%."

According to broking platform CMC Invest, four out of six analysts currently rate the bookie stock as a buy.

Lodge's team is in no doubt with their bullishness for the $250 million company.

"The company expects cash active clients to grow in the second half. We like the outlook."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended PointsBet. The Motley Fool Australia has no position in any of the stocks mentioned. 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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