Shuffle Master (SHFL) announced dissapointing earnings yesterday and dropped nearly 10% today. But instead of negative comments from the CEO and analysts both were positive as Shuffle Master tries to integrate new aquisitions and move toward a leasing business model instead of sale. The transition is hitting short term earnings but I believe if you stay with the stock you’ll see the company have consistent earnings in the future. This stock has been the biggest dissapointment in you Mayor’s portfolio but I think it may be time to add more. Let’s go through the positives. - Consistent revenue growth (10% this quarter, 20% plus in past two years) - Growth industry. Lots of casinos are opening in Macau in the next few years and Las Vegas is seeing a surge in construction. This is a huge opportunity for the biggest table maker in the world. Any time you see Three Card Poker, Casino War, Bad Beat Texas Hold Em, just to name a few, you’re seeing Shuffle Master’s products in action. The gambling market has had consistent growth in the last 10 years which will continue into the future as more people in more countries have disposable income. Negatives are also a concern. Acquisition have yet to add to earnings and expenses are rising. Both of these need to be controlled and management must perform if this stock will come back. I love a stock that’s fallen on hard times and after more than a 50% drop in the last eight months I think this qualifies as hard times. Currently trading around $14/share I think this stock is a buy in the $13’s. It may be a rocky ride ahead but Shuffle Master will get back on it’s game.