___ ___ ___
Overweight, Slack Jawed, Sweaty and Loving It
“If you can dream it, you can do it” –Walt Disney
Good day members,
Today was the first morning I found myself caught in the old catch 22. Working from a home office has its benefits when the kids are out of school. We get to see them all summer long. That’s the catch…
A week out of school now and the Caesar elders are being driven absolutely bonkers every morning. Without the obligation of waking early each day for school, of course the kids have decided that 6am is a good time to get started… during semester, we manually shake them from their slumber around 7am… go figure.
There’s nothing more rewarding than having teeny-bopper boob-tube shows cranked at maximum volume startle you awake every morning. I feel inches from a heart attack. On the bright side, we’re promised their summer reading list will be completed on time, but I’m not too sure. I do know that I need to get these kids out of here for a while, at least until camp starts in two weeks.
So, along with millions of other oddly chipper and confidently overweight yokels (myself included), it’s off to Disney we go! One week of standing hours in line, dripping sweat in the 95 degree heat while on the verge of mental breakdown. I can’t wait. And for some reason, surely rooted in self-hate, millions of us are going to do the same thing at some point during the summer, at some theme park, in some state on some blisteringly hot day.
So today, as herds of humans begin their annual migration to the parks, let’s have a look at some of the amusement companies that are publicly traded.
We’re going to bypass The Walt Disney Company (DIS) today as it’s far more diverse than just the theme parks. But we are going to look at three stocks that are more “pure-plays” in the amusement sector, and one of them may be a good buy, even in a correcting broad market.
- Six Flags Entertainment Corp. (SIX)
- Cedar Fair, L.P. (FUN)
- SeaWorld Entertainment Inc. (SEAS)
Our first ride today will be Six Flags (SIX). According to Yahoo! Finance, Six Flags Entertainment Corporation (SIX) owns and operates regional theme, water, and zoological parks.
Its parks offer various thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets.
The company owns and operates 18 parks, including 16 parks in the United States; 1 park in Mexico City, Mexico; and 1 park in Montreal, Canada. It operates its parks under the Six Flags brand name.
The company was formerly known as Six Flags, Inc. and changed its name to Six Flags Entertainment Corporation in April 2010. Six Flags Entertainment Corporation was founded in 1971 and is based in Grand Prairie, Texas.
The two year chart above shows SIX on a nice tear. We’re going to use the two year charts for each of the three stocks today so we can compare their action directly to each other during a time period in which all three have been publicly traded.
The last 8 months or so have been very good for investors in SIX rising from the low 30’s to as high as 51. This $4.3 Billion company is earning 68 cents per share and is yielding a nice 4.3% dividend on $2.08 per share.
This dividend has me a little wary of buying. Generally we don’t want to invest in stocks that are paying out more in dividends than they’re earning per share, and the gap here is huge. And with a PE of 68, SIX is twice as expensive as the other two companies. If Six Flags doesn’t have an amazing summer, look out for a dividend cut and a sharp drop in the stock price.
Now that we’ve gotten off that disappointing ride, let’s have some FUN.
According to Yahoo! Finance, Cedar Fair, L.P. (FUN) owns and operates amusement and water parks, and hotels in the United States and Canada.
The company operates approximately 11 amusement parks, 3 outdoor water parks, 1 indoor water park, and 5 hotels.
Its amusement parks include Cedar Point located on Lake Erie between Cleveland and Toledo in Sandusky, Ohio; Kings Island near Cincinnati, Ohio; Canada’s Wonderland near Toronto, Canada; Dorney Park & Wildwater Kingdom located near Allentown in South Whitehall Township, Pennsylvania; Valleyfair located near Minneapolis/St. Paul in Shakopee, Minnesota; Michigan’s Adventure located near Muskegon, Michigan; Kings Dominion near Richmond, Virginia; Carowinds in Charlotte, North Carolina; Worlds of Fun located in Kansas City, Missouri; Knott’s Berry Farm located near Los Angeles in Buena Park, California; and California’s Great America located in Santa Clara, California.
The company also manages and operates Gilroy Gardens Family Theme Park in Gilroy, California; and owns and operates the Castaway Bay Indoor Waterpark Resort in Sandusky, Ohio, as well as three gated outdoor water parks.
Cedar Fair Management, Inc. serves as the general partner of Cedar Fair, L.P. The company was founded in 1983 and is based in Sandusky, Ohio.
Just like SIX, FUN has had a great last 8 or so months. The stock has risen from the low 40’s to a recent high of 60. And like SIX, the company is paying a nice dividend.
This $3.2 Billion company is yielding 5.1%, paying $3 per share, while earning $1.86. Yes, once again we’ve got a company paying out more than they’re earning. However, it’s not nearly the spread we saw with SIX.
With a PE of 31, FUN is half the price of SIX and with a greater likelihood of keeping that dividend check steady. But like SIX, FUN is going to need a great summer to keep it.
Our last ride of the day is SeaWorld Entertainment Inc. (SEAS).
According to Yahoo! Finance, SeaWorld Entertainment, Inc. operates as a theme park and entertainment company in the United States.
The company operates marine-life theme park under the SeaWorld brand name in Orlando, San Antonio, and San Diego; Busch Gardens theme parks, which are family-oriented destinations with foreign geographic settings in Tampa and Williamsburg; Discovery Cove marine-life theme park in Langhorne; and Sesame Place, a seasonal park in Langhorne.
It also operates water parks under the Aquatica brand name in Orlando, San Antonio, and San Diego; under the Adventure Island name in Tampa; and under the Water Country USA name in Williamsburg.
In addition, the company operates its theme park under Shamu and Sea Rescue brand names. It owns and operates 11 destination and regional theme parks.
The company was formerly known as SW Holdco, Inc. and changed its name to SeaWorld Entertainment, Inc. in December 2012. SeaWorld Entertainment, Inc. was founded in 1959 and is headquartered in Orlando, Florida.
Here we have an amusement company whose 2 year chart (which includes the IPO) shows original investors have taken a bath. However, over the course of the past 6 months or so, the stock has sharply bottomed and turned around.
Killer whales eating trainers, animal rights activists and films that show SeaWorld in a poor light have really hurt the stock. But… this one may be the very best of the three for long term investors.
While Six Flags and Cedar Fair operate mostly in places where the winter shuts down a large portion of their business, SeaWorld rakes in those admission fees pretty much year round. With most of the bad press behind them, SEAS has a great shot to be the biggest winner of the three.
This $1.85 Billion company is earning 64 cents per share while yielding 3.9% on 84 cents. Yes, they’re paying more than their earning (with the smallest spread of the 3), but with that bad press in the rear-view, don’t be surprised to see their earning begin to creep higher as us chunky tourists fill the gates.
The short term technical’s on the stock points to a pullback, so keep an eye out for an entry point sometime this summer.
Perhaps sometime soon (after our family returns from there) we’ll discuss The Walt Disney Company (DIS) and their wonderful brand of entertainment/brainwashing. But for today, have a good look at these three and see if any of them fit your portfolio goals.
Until next time…
“Summer means happy times and good sunshine. It means going to the beach, going to Disneyland, having fun” –Brian Wilson
___ ___ ___
Caesar’s Financial Daily is not registered as investment advisers nor as a broker/dealer with either the U. S. Securities and; Exchange Commission or any state securities regulatory authority. Users of their website are advised that all information presented therein is solely for informational purposes, is not intended to be used as a personalized investment recommendation, and is not attuned to any specific portfolio or to any user’s particular investment needs or objectives. Furthermore, such information is not to be construed as an offer to sell or the solicitation of an offer tobuy, nor is it to be construed as a recommendation tobuy, hold or sell (short or otherwise) anysecurity. All users of the website must determine for themselves what specific investments to make or not make and are urged to consult with their own independent financial advisors with respect to any investment decision. All opinions, analysis and information included on these websites are based on sources believed to be reliable and written in good faith, but should be independently verified, and no representation or warranty of any kind, express or implied, is made, including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. In addition, we undertake no responsibility to notify such opinions, analysis or information or to keep such opinions, analysis or information current. Owners, employees and writers of and for Caesar’s Financial Daily may have long or short positions in securities that may be discussed on this website. All materials presented, editorial, advertising, linked websites or otherwise are for informational and/or opinion only and cannot be construed as advice to any individuals or groups.