Can you believe it’s been one year since Russia invaded Ukraine?

A lot has happened since then, both in the world in general and in stock markets.

“Markets continue to waver amid uncertainty over [US] Federal Reserve policy and worries over a possible recession,” said Firetrail analysts in a memo to clients.

Meanwhile, in Australia, ASX shares are in a frenzy from corporate reporting season.

“It’s been the busiest week of the Australian reporting season with over 130 companies reporting.”

Amid the chaos, the Firetrail team singled out one gem with excellent prospects:

Digital business is going gangbusters

The Lottery Corporation Ltd (ASX: TLC) share price has risen more than 10.6% from its first-day price last May.

The company operates lotteries based on licences from state governments, which means that it has a monopoly everywhere except for Western Australia.

The Firetrail team noted that it presented “a strong result” last week.

“A key strength of the result was that they have grown the active user base and seen digital penetration settle structurally higher than pre-COVID.”

Customers are increasingly moving away from buying lottery tickets physically at the newsagent, so the digital channel is a boom area for Lottery Corp.

“This increase in the number of active registered customers… shows their ongoing digital strategy is driving user engagement, which we expect will set them up for further growth.”

The Firetrail analysts are so convinced of the company’s future that they already own the stock in the Australian High Conviction Fund.

Wilsons equities strategist Rob Crookston is also a fan of Lottery Corporation, as he outlined last week that it could be a tempting takeover target for a bigger fish.

Speaking about both Lottery Corp and Cleanaway Waste Management Ltd (ASX: CWY), he said:

“​​These look attractive acquisition targets due to their stable cash flows, relatively low debt balances and strong market positioning in their respective markets.”

Crookston added that Lottery Corporation’s share price now seems “well priced versus other infrastructure-like assets”.

Lottery Corporation shares closed Friday at $5.20 each.

The post ‘Strong result’: Firetrail’s top pick of the ASX reporting season appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. 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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