Opinions Colin Stewart
Great Canadian Gaming CorpGC.TOTOP PICKApr 24, 2018
Colin StewartOwned
$35.72
Stock price when the opinion was issued
$44.98
As of Sep 22, 2021. Market Open.
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DON'T BUY
He got stopped out of this. It's well-run, but the casinos are closed so there's no revenue coming in. GC carries a reasonable amount of debt. Also, casinos have high operating expenses, even during this lockdown. He wants to see stability in their debt, though. In recessions, gambling performs well, though.
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BUY
Will GC go ahead with their Dutch auction at this low price? A Dutch auction is a buyback of shares in a block within a range. It's tax-inefficient for a shareholder who's not in an RRSP. Before the virus, itt was difficult for GC to get the amount of shares they wanted at a maximum of $46. But a clause says that if the S&P drops 10%, then the auction is off. But he believes GC will do the auction anyway. He likes this stock, a past pick. They will likely take advantage of this low stock price and change the price range. They have high cash flow and a reasonable valuation. Three to six months after this virus, GC will be in better shape because they bought back stock cheaper. Sure, there will be a slowdown in their gambling revenue, but not a cessation. It's hard to buy this with negative price momentum, but this is cheap. A long-term buy, sure.
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DON'T BUY
BUY
It has been a bit of a frustrating ride for him. The stock price has gone nowhere. The stock has put in a floor here and he would like to see it go up now. This will tend to hold up well during periods of weakness. It is a very well run company. Their financial metrics are strong. He is looking to hold this longer term.
Jason Del VicarioOwned
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TOP PICK
They run casinos in BC and ON. A strong consumer market should continue to support it. It has a 27% ROE and trades at 16 times earnings. There is some belief on the street that they over paid for the casino rights in the GTA, but he argues that this is already factored into the current valuation metrics. Another knock is that they are not paying a dividend. Yield 0% (Analysts’ price target is $47.25)
Jason MannOwned
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BUY
Their issue was the money-laundering inquiry in their BC casinos which stopped some good growth. Now, that issue is working its way through the system. The Woodbine Casino remains their jewel, attracting investment. GC offers a great return on capital. You don't need much capital to grow. New locations are very profitable. He owns Brookfield Business Partners which co-financed the Woodbine site.
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TOP PICK
They have a privileged position in the Toronto area market and they’ve teamed up with Brookfield. They’re building many new large casinos in Ontario. Investors should see this as a long-term position around 3. It has high cash-flow with defensive aspects to it. (Analysts’ price target is $47.25)
Colin StewartOwned
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PAST TOP PICK
(A Top Pick Nov 19/18, Up 17%) He still likes it. A high quality company with good long-term outlook. They are spending a lot of money building out casinos. It is a top pick today.
Colin StewartOwned
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This is the largest casino operator in Canada. It is a big business in BC, they are now doing business in Nova Scotia, and they have just been awarded bundle licenses in Ontario. The Ontario bundle includes Woodbine Race Track in the Greater Toronto Area. This is a crown-jewel level opportunity. It currently has just slot machines, but they are making a huge renovation, in conjunction with Brookfield. The Toronto area is underserved by casinos now, and they have an effective monopoly in the GTA for the next 22 years. This is an enormous opportunity. He doesn’t think that opportunity has been priced into the stock yet. There is some concern about regulatory overhead in BC, because BC has issued new rules to limit money-laundering via casinos. However, there are no allegations against Great Canadian Gaming. The impact might be to reduce the amount of business from large players, but he thinks this has already been priced into the stock. Management owns a lot of stock, the company spits out a lot of cash flow, the company trades at a reasonable multiple, and there are many barriers to entry, protecting the business. This is a good business to own in a recession. (Analysts’ price target is 39$)