Forget IGT Stock and Look at ACEL Instead

Core Viewpoint - Accel Entertainment is a lesser-known gaming stock that presents a unique investment opportunity due to its business model and potential for growth in the distributed gaming sector [2][4]. Company Overview - Accel Entertainment operates as a distributed gaming or route operator, placing video gaming terminals (VGTs) in non-casino locations such as bars and convenience stores, distinguishing it from traditional casino operators [4]. - The company has a market capitalization of approximately $936.9 million, making it a small-cap stock with limited coverage from analysts [2][9]. Market Position and Customer Base - Accel's customer base primarily consists of older individuals (age 55+), who are less affected by economic fluctuations and demonstrate loyalty to the gaming terminals [8]. - The company currently controls around 28,000 VGTs across 10 states, with Illinois contributing about 75% of its revenue [8]. Growth Potential - The opening of new markets is seen as a catalyst for Accel's growth, with analysts suggesting that state budget deficits may lead to increased VGT expansion as a less controversial alternative to internet casinos [8]. - Accel's revenue has grown at a compound annual growth rate (CAGR) of 19% since 2022, indicating effective execution of its acquisition strategy [13]. Financial Health - Accel boasts one of the strongest balance sheets in the gaming industry, with the potential to generate up to $1.36 per share in free cash flow (FCF) next year [10]. - The company is actively pursuing a prudent mergers and acquisitions strategy to mitigate risks associated with its competitive market, including recent acquisitions in northern Nevada and Louisiana [12].