$100 Bucks Says This Stock Goes Up

Great Canadian Gaming Corp (TSX:GC) is in the gaming, entertainment and hospitality business. Is the investment a good idea or just a gamble?

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Before you ask for my contact information so you can hold me to my word, I just want to say that I’m not going to give it to you.

It’s not out of fear, but rather because I believe that you can make much more than that by investing in this stock.

For my friends in Ontario, I am sure many of you are familiar with Casino Woodbine. Well, guess what? Great Canadian Gaming (TSX:GC) owns the casino along with 24 other locations across Canada.

The company was founded in 1982 and has since grown to include over 16,000 slot machines, 575 game tables, 71 dining amenities, 500 hotel rooms and 9,500 employees.

As much as I would love to say that people don’t like gambling anymore and see it as a waste of money, Great Canadian Gaming has proved me wrong with a net income that has grown from $78 million in fiscal 2014 to $151 million in fiscal 2018.

Investors should consider buying shares of this company due to a strong management team and a growing business.

Strong management team

It’s been a while since I have been this impressed with a management team. Usually the management team will get four out of five things right, but most of them forget that one thing that could make it a truly great company.

Great Canadian Gaming’s management team has managed to do a perfect job running the company, as indicated by its share repurchase in 2018 and its redemption of debt.

In the fourth quarter of 2018, the Company purchased over three million shares for cancellation. This effectively reduces the amount of shares outstanding and increases the earnings per share as the same amount of earnings are being divided by a smaller amount of shares outstanding.

This is enticing for investors, as a growing earnings-per-share is indicative of a company that is successful in generating net income.

The share repurchase also indicates that the company is confident that it will continue to do well (or it wouldn’t waste millions of dollars on purchasing shares but would direct this money to more pressing issues).

The company completed the redemption of its senior unsecured notes, which means that it can effectively stop interest payments for this particular debt, saving the company millions of dollars per year

A growing business

Fiscal 2018 was a solid year for this company. In October, the company opened Shorelines Casino Peterborough and in December it introduced table games at Elements Casino Mohawk and Elements Casino Flambor0, a historic first for the Halton Region.

The company continued this momentum into fiscal 2019 whereby it opened the addition to the Great Blue Heron Casino, which features new dining options and over 200 new slot machines.

All of this is indicative of a company that is focused on growing the business to deliver returns to investors.

Bottom line

It has been said that investing in the stock market is an educated gamble. I agree completely.

That said, have you ever noticed that casinos rarely go bankrupt? And further to this, have you ever noticed that the casino wins more times than you do?

This isn’t a coincidence, as casinos are designed to take money from players and put it into the hands of the casino owners. Luckily for you, by investing in Great Canadian Gaming, you will be the owner, which means that it will be the last time that a casino dupes you out of your hard-earned money.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chen Liu has no position in any of the stocks mentioned.

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