7 Best Small-Cap Casino Stocks Hedge Funds Are Buying

5. 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.