The future is brightAll of us GH shareholders are in a nice position. All we have to do is wait. It costs nothing. We don’t have to do any heavy lifting and we have expert management looking after our investment. The only thing we have to come up with ourselves is patience.
Here is why I believe the future is bright for GH:
Future high paying jobs
Oil demand is projected to increase until the year 2035 at which point it will plateau (OPEC Sept 28, 2021 as reported by Reuters). Shareholders of oil and gas companies have been pressuring management to return capital to them instead of increasing production. Management of these companies are listening to their shareholders and are increasing production by low single-digit percentages instead of opening up the flood gates. This will translate into higher oil prices as demand outstrips supply and an increase in jobs and with higher pay.
There will be more tech jobs created
There are approx. 3,000 tech companies in Alberta up from 1,238 in 2018 (CBC reported on April 22 2021). Infosys a major IT firm based in India will create 500 jobs in Calgary over the next three years (BNNBloomberg reported on March 3 2021). Tech jobs are high paying jobs that create a lot of disposable income for employees.
Population growth
Over the next 25 years (2021 - 2046) The Alberta Treasury Board and Finance Ministry projects growth of 1.61%, 1.59% and 1.02% per year in the population of Calgary, Grande Prairie and Fort McMurray respectively.
Calgary’s 1.61% is the highest projected in Alberta. Grande Prairie’s 1.59% is the second highest projected in Alberta and Fort McMurray’s 1.02% is the seventh highest projected in Alberta.
Scarcity of product
At its meeting on January 22, 2015, the AGLC extended the moratorium on new casino licences in Alberta indefinitely. This moratorium has been in place since 2008. This makes each current casino more valuable as it diminishes the choices the public has for this type of entertainment.
Management
GH management is of the utmost quality. They have always been focused on the long-term and always made very logical and shareholder friendly decisions. They have handled this pandemic in an exemplary fashion and in my view have made all the right decisions.
Management has greatly increased the intrinsic value of GH for its shareholders. Don’t go by the current stock price. The pandemic is not their fault. The intrinsic value of GH shares is much higher that its current price and will continue to rise over time.
David Will is an expert in his field. A lot of experience there. Darcy Will was brought up in the “family business” and will one day lead this company, having gained all the experience from his father and his own.
In normal years the business has a high return on capital employed and throws off strong free cash flow. It also uses very little debt. All signs of good management.
In the not too distant future when the stock price is materially higher and the dividend has been fully reinstated, and then some (thanks to stock buy-backs and the above factors), we will be scratching our heads thinking why we were so obsessed about the short-term when we should have taken the long view.