Us Small Cap’s view on the $3m TD LOC Gatekeeper Is Moving On Up As Investors And Lenders Recognize Its Robust Operations
We have noted several times in the past that Gatekeeper has kept its share count quite steady at under 90 million shares over the last couple of years. The risk of dilution remains low because of the Company’s consistently positive net earnings and strong working capital position. Now that risk is further mitigated as it recently entered into a $3 million revolving line of credit with TD Bank. So if Gatekeeper finds itself in a position to grow but in need of cash in order to take advantage of the opportunity, it can tap this line of credit before considering an equity raise.
The credit should also be a signal to shareholders about the robust nature of Gatekeeper’s business. TD Bank is one of the largest banks in Canada. For a small business to be able to get a loan of this size at an interest rate of prime plus 0.85% per annum shows investors that the bank believes the business is solid and risk of insolvency is low. Most small cap TSX Venture listings can’t get a loan at all and if they do, it’s often at interest rates exceeding 10%.
GSI has provided outstanding returns to long-term shareholders this year but that shouldn’t discourage investors who are just learning about the opportunity from initiating a position. As GSI is trading at $0.62 in Canada, its market cap is still only around $61 million, meaning its revenue multiple is around 3x for such strong growth and robust margins. Smallcaps Recommendation: BUY.
Cant fight facts @BS77.