We are into August now, and folks are scrambling to pack some fun into the last few weeks of summer. For many families the choice will be to head off to one of the nation’s great amusement parks for thrills, spills and fun. Investors might want to consider these parks as well, as more people are vacationing closer to home this year, choosing the parks over more exotic locations.
Luckily we have Portfolio Grader to help us sort the wheat from the chaff.
The granddaddy of amusement parks is of course Walt Disney World, the crown jewel of the Disney (DIS) kingdom. This company not only has the best-known amusement parks in the world, it also has extensive media assets including studios, television networks and of course the iconic film library. Indeed, it’s the size (and success) of these other divisions that keep the standout performance of the theme parks in the shadows. The challenges of the ABC television network have been a bit of drag on Disney’s fundamentals. The stock was downgraded to a “hold” back in May after the earnings report, and the stock remains a “C” in the Portfolio Grader system.
Six Flags (SIX) doesn’t have the other divisions to slow down the theme parks, and it shows in the results. The company owns 18 parks throughout North America. Six Flags reported record revenues for the first six months of the year; that record pace should continue through August as vacationers look for one last flurry of fun. The company has also said that cash flow above what is needed to pay for upkeep and growth of the parks will be spent on shareholder dividends and buybacks. And sure enough, the company repurchased $404 million of stock in the first half of the year and the shares yield 4.8% at today’s price. The stock is a “B”-rated issue by Portfolio Grader — a “buy.”
Cedar Fair (FUN) also focuses on just amusement parks with 11 parks, four outdoor waterparks, one indoor waterpark and four hotels. The company owns some of the country’s best-known parks, including Cedar Point in Ohio, Knotts Berry Farm in California and Kings Dominion in Virginia. The wide geographic mix of properties is allowing the company to benefit from the close-to-home vacation trend. The stock yields 5.8% at current prices, and it’s rated a “buy.”
Summer may be coming to a close, but investors can enjoy the fun and profit of amusement parks year-round by buying the stocks with the very best fundamentals. Portfolio Grader makes it as easy as an all-day park pass.
Louis Navellier is the editor of Blue Chip Growth.