Opinions Michael Simpson, CFA
Gateway Casinos Income FundGCI.UN.TOBUY ON WEAKNESSFeb 23, 2007
Casinos, primarily in B.C. and Alberta. Trading in line with its US comparables. Expanding their flagship in Burnaby with a hotel that adds an element of risk. Would prefer it around $15.
$18.80
Stock price when the opinion was issued
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HOLD
At these prices, it's dead money for a year. Likes it, but doesn't expect any growth. Having a little bit of trouble meeting their construction timeline on the new hotel/casino, which will probably affect earnings in the short-term. 8% percent yield.
Robert LauzonOwned
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BUY
This is more of a longer term play. Not going to get a lot of upside in the unit price over the next 6/12 months. Facing a number of operating challenges. The number of slot machines in the Vancouver area has more than quadrupled. Stable income stream. Limited capital expenditures needed.
Michele RobitailleOwned
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TOP PICK
Possibly a slightly risky play, but over the long-term a good place to be. The company has a number of short-term challenges. A lot of new competition has come into the Vancouver area.
Michele RobitailleOwned
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BUY
Has had a pretty dramatic correction. Stumbled in the 1st quarter and a little bit in the 2nd because the competitive environment in Vancouver has become very tough. The growth is going to take some time. At a level where most of the downside is reflected in the price. Long term, really likes the stock as it is well suited to the trust model.
Michele RobitailleOwned
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BUY
Longer term, the casino business, particularily in B.C. is a very good model. Basically all the capital expenditures are funded by the provincial government and in turn they get a fairly big chunk of the operating profits. Long term, it is very well positioned. Shorter term, it will continue to face some challenges in competition. Not a bad entry point.
Michele RobitailleOwned
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BUY
Good business that is well suited to the income trust model. Has been an enormous amount of expansion in British Columbia and they are an active participant. Could see some consolidation in this area and they are well positioned to take part.
Dean OrricoOwned
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BUY
Likes the name longer term as the business model is very suitable for a trust structure. Very stable revenues and cash flows. Minimal capital expenditures in British Columbia as the government has a fund set up for casinos. A bit of a disappointing 1st quarter result. Could be some continued volatility, but longer term is positive on it.
Michele RobitailleOwned
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BUY
A perfect model for a trust. Very low capital expenditures and very strong cash flow; therefor the ability to push off very high distributions. Last quarter's numbers were a little disappointing because of competition so the trust has pulled back. Should be able to wade through it with a little more marketing and aggression.
Greg GuichonOwned
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BUY
