Great Canadian Gaming Corp (GC.TO)

They are growing into Ontario. Their recent earnings really caught on with an impressive number. It was not even a full quarter of results from the recent acquisition. They have 20 year contracts. 16 times earnings. (Analysts’ target: $51.80).

Casinos are good businesses. They have had recent tailwinds, such as new contracts in Ontario. He thinks this is a good stock to own. It generates a lot of cash and probably has more upside. However, it is not cheap. He would hold onto anything he owned, but would not buy at this price.

You can never go wrong with gaming – it is recession proof. It is a great BC company that has shifted into high growth mode. A well-run company who as bought back 22 million in shares that trades at 21 times earnings. It is looking to expand into Ontario in a big way. Yield 0%. (Analysts’ price target is $38.80 )

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$)

They have great management. There was hope that the OLD in Ontario would privatize their gaming. They are selling down some of it and GC-T has done very well. They are one of the best operators in Canada.

(A Top Pick Sept 30/16. Up 29%.) He still likes this. May be a bit conservative in the short term. They’ve been swept up in money laundering headlines. Feels a lot of people are missing the mark, where they think the company is doing something nefarious, but to him it sounds more like a broad regulatory issue in BC, and there may be some tweaks to the rules. The real story is with the GTA gaming bundle they just signed. Buying on weakness is a fine strategy.

(Top Pick Nov 2/16, Up 44.16%) They signed a deal with Ontario to create casinos in Ontario. They want to develop the Woodbine site. It sets up growth potential going forward. He likes it more now than a year ago.

They are building a gambling complex in Toronto. Ontario is looking to expand gaming facilities. The GTA and Vancouver are the biggest markets in Canada. If it checks back to $28 that would be a good entry level.

Does this pay a dividend? It does not pay a dividend because they have some debt covenants on some fixed income that they issued. As a casino operator, it is kind of a stable business. Growing organically through some expansions in Vancouver. Also, have some new casinos in Ontario. OLG is opening up packages that companies can bid on as well. There is some good growth potential here. Not that expensive.

(A Top Pick Sept 30/16. Up 4.9%.) Just released a very solid earnings report and beat estimates by a fairly wide margin. The new casino coming online is moving fine. There is still some organic growth potential through some Ontario gaming bundles that they have an opportunity to bid on. A great story that is underfollowed.

Their casinos are mostly out West, but he likes it because they have expanded. Bought Casino New Brunswick which has 2 sites, and are building 2 sites in Ontario which will be up and running early next year. He likes it because of the share buyback. Their share count has gone down by about 22 million over the past 10 years. That just creates great earnings leverage. They don’t pay a dividend. It is gambling, so almost recession proof.

A casino operator. Starting to get some momentum behind it, but it is still pretty cheap. They operate in a stable business with some regulatory protection. There is some organic growth runway behind them as they are expanding a casino in British Columbia as well as a new one in Belleville Ontario. Thinks it may have been overlooked because of a lack of dividend, but sometimes that is good for a business.

(A Top Pick July 7/15. Down 24.92%.) Missed a couple of quarters that really took the stock lower, and they have not recovered. Sold his holdings at around $19. The one good thing is that they have a history of buying back a lot of stock, especially after an earnings miss.

This is still one of his largest holdings. Had a bit of a tough period 9 months ago when they missed, and the stock came off. It also took a hit when the Government changed its policy on VIP customers, but that hasn’t appeared to be a problem, and has since recovered a bit. Price momentum is a little weak, but valuation is really solid. This is generally a cash machine. 20% ROE. Doesn’t pay a dividend, because they prefer to buy back stock.

Has owned this in the past and has it on his radar screen. There is not going to be as many people with disposable income for gambling and restaurants in the current economic situation. Would like to see some stabilization in the Canadian economy, followed by a pick up, before adding this.