Stockpickr: Win Big With Top 5 Poker Stocks

For instance, Cryptologic(CRYP Quote) is one name that would benefit considerably, because it makes the software that fuels many of the online poker sites out there. Cryptologic has an excellent balance sheet, equipped to handle any slowdown with $126 million in cash in the bank and no debt.

With a market cap of about $405 million, that leaves the company with an enterprise value of just $283 million. The company had cash flows of $40 million over the past 12 months, giving it an enterprise value to cash flow multiple of just 7, making it an excellent takeover target at these levels if you think the legislation will be repealed.

Even without such a repeal, analysts from ThinkEquity expect Cryptologic to earn $1.30 per share on revenue of $90 million in 2007, down from their earlier estimate of $125 million in revenue and $2.08 a share. That's a harsh blow, but it's not a knockout punch as many had initially expected.

Two great Stockpickr portfolios also contain Cryptologic.

First, I've written about super-investor Mohnish Pabrai several times. I profiled and interviewed him for my book, Trade Like Warren Buffett, and I've also written about him as a potential successor to Warren Buffett. He's a deep value investor with about $500 million in assets and a tendency to like small-cap stocks that are trading well below their intrinsic value.

Go to Stockpickr to see the rest of his portfolio, including steel company Ipsco(IPS Quote) and regional airline company Pinnacle Airlines(PNCL Quote).