This ASX share has doubled this year but it's still 'early days'

There is an ASX stock that's risen more than 111% this year, but one fund reckons it's not too late to hop on for a ride.

According to the latest monthly memo from Firetrail Small Companies Fund, shares for fun park operator Ardent Leisure Group Ltd (ASX: ALG) are still trading cheaply.

"We continue to see significant room for consensus earnings upgrades and valuation re-rating," the Firetrail team told its clients.

"Ardent Leisure is a turnaround story, but it is still in the very early days of the turnaround."

The team explained why Ardent is one of its top 3 overweight holdings currently.

Dreamworld is great, but Main Event is a money-printer

In Australia, Ardent is best known for the theme park Dreamworld on the Gold Coast.

But it actually rakes in most of its revenue from the other side of the world.

"Over 90% of the value of the business is derived from a US based chain of family entertainment centres called Main Event," the Firetrail memo read.

"Ardent currently operates 45 Main Event centres across the US and plans to continue expanding its footprint."

The closest rival for Ardent in the US is Dave & Buster's Entertainment Inc (NASDAQ: PLAY), which runs a similar network of amusement centres.

Four years ago, Main Event was only averaging $7 million of revenue per outlet while Dave & Buster's was taking in about $10 million per centre.

"Given the similarities between the two businesses, there was no reason for such a large difference," the memo read.

"In September 2017, Gary Weiss took the chairman role at Ardent and since then the focus has been on restructuring and rebranding Main Event. Today, Main Event is returning ~$10 million revenue per centre."

Obvious post-COVID winner

As coronavirus restrictions are stripped away in the US, amusement centres are understandably a big beneficiary.

"Main Event same centre revenue has increased almost 40% compared to pre-COVID 2019 levels, highlighting the strong earnings that can be generated as economies reopen," stated the Firetrail team.

"Looking ahead, Ardent Leisure [stock] continues to trade at a material discount to its closest peer Dave & Buster's."

Wilson Asset Management portfolio manager Tobias Yao has been a fan of Ardent shares for some time. Back in June, he told anyone who would listen to back the entertainment company at $1 a share.

Then even after the ASX share appreciated to $1.45, he warned there was plenty more to come.

"I think there's another 40% upside to the current share price," Yao said on 10 September.

"In terms of catalysts, we think this business can continue to eke out earnings upgrades over time. We think the sum of the parts continues to be very appealing."

The Ardent share price was at $1.51 on Tuesday afternoon.