Amaya Stock tabbed as "Great Investment" in 2016

Do you dabble in both online poker and investing? If so, then Amaya Gaming stock could give you the best of both worlds in 2016. This is according to analyst Frederick Steier, who offered some great points on why Amaya — despite a disappointing third quarter — could be an excellent stock pick next year. That said, let's break down a few points that Steier offered while writing for TheStreet.com.

The Recent Selloff means You get Amaya Stock at a Discount

Given the aforementioned poor Q3, in which Amaya earned about 14% less than they projected, many shareholders were motivated to sell as quickly as possible. This has pushed the online gaming company's stock price below $16, giving prospectors a good chance to buy at a discount. So why does Steier identify this deal as a "discount?" First off, he sees it as a good sign that Amaya has already repaid $700 million in long-term debt. The analyst also likes Amaya's plan of expanding their international offerings with casino games and sports betting, before working back to the slowly growing U.S. market.

Online Gaming should continue spreading across the U.S.

PokerStars earned a big victory when it was finally granted a license in New Jersey. And this should allow them to fully capitalize on the U.S. market when it grows, which is something that Steier sees happening in the near future. He points out that California and Pennsylvania are moving closer to regulating iGaming. From here, it shouldn't be long before other cash-strapped states join the trend, thus expanding the online poker player pool.

Pre-UIGEA Partypoker shows Glimpse into Amaya's Future

Partypoker was once the top dog in the American market, before the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 was signed into effect and they retreated. But before this, Steier points out that partypoker generated $977 million in earnings in 2005 and they were valued at $8.5 billion — showing 51% revenue growth and 42% earnings per share growth from the previous year. So once the U.S. iGaming market begins maturing, Amaya has a bright future to look forward to.

Amaya's Casino Operation will keep growing

With both PokerStars and Full Tilt rolling out casino and sports betting products, Amaya is really diversifying their brand. However, as Steier points out, casino gaming only accounts for 13% of the company's revenue. This should change, though, as more players become accustomed to using PokerStars and Full Tilt for more than just online poker.

Currency Exchange Rates are what Really hurt PokerStars

As alluded to before, Amaya Gaming's stock prices tumbled from around $25 all the way down to $16. So is this cause for alarm? Not really because Steier explains that the drop was mainly attributed to currency exchange rather than bad business. "This was a massive overreaction to the company's third-quarter results, which showed some nasty hits from currency exchange rates," Steier wrote. "As a business that is primarily international yet based in Canada, the strong greenback appears to have harmed the company's revenue and bottom line."

The overall numbers for Amaya look excellent when you consider that their Q3 revenue was up 19%, and they added 1.85 million customers, bringing their total to 97 million worldwide. And what's impressive is that this doesn't include American customers, which is what Steir believes makes Amaya a great investment for the future.