Wednesday, June 13, 2007

Summer Stocks continued: Amusement Parks

"I'm Going to Disneyland!" ~ New York Giants quarterback Phil Simms [1987] and numerous other football players and sports figures since then

One of the most popular destinations for family vacations and teenage dates is the amusement park. The oldest amusement park was Bakken which was created in 1583 near Copenhagen, Denmark. Since then, amusement parks, and now theme parks, have become desirable attractions for children, teenagers, and adults. Maybe it’s time to take a ride on one of the amusement park companies.

Cedar Fair LP (FUN), which has a great stock symbol by the way, owns and operates amusement and water parks throughout the country, including Cedar Point in Ohio; Knott’s Berry Farm in California; Dorney Park & Wildwater Kingdom in Pennsylvania; Valleyfair in Minnesota; Worlds of Fun in Missouri; Geauga Lake & Wildwater Kingdom in Ohio; Michigan’s Adventure in Michigan; and Castaway Bay Indoor Waterpark Resort in Ohio. The stock, which is structured as a limited partnership, has a price sales ratio of 26.4 and a PEG of 2.8. It also pays a nice yield of 6.7%; their dividends have been paid quarterly since 1988.

Six Flags, Inc. (SIX) owns and operates amusement, theme, and water parks throughout the United States. They currently have over 25 parks. Earnings are negative but the stock has a price sales ratio of .62. Quarterly revenue growth was up over 20% year over year.

The largest segment of the Walt Disney Co. (DIS) is their amusement park division, which generates 27.7% of the company’s revenues. Their amusement parks include Disneyland, Disney's California Adventure, Walt Disney World [including EPCOT and Disney-MGM Studios], Disneyland Paris, Hong Kong Disneyland, and the Tokyo Disney Resort. The company has a P/E of 15.7 and a PEG of 1.4, with a small yield of .9%. Quarterly earnings were up 27% year over year on quarterly revenue growth of .6%.

Busch Entertainment Corp., a subsidiary of Anheuser-Busch Companies Inc. (BUD), is one of the largest theme park operators in the United States. Their parks include Sea World, Discovery Cove, Busch Gardens, Adventure Island, Water Country USA, and Sesame Place. The stock has a P/E of 21 and a PEG of 2.1, with a yield of 2.2%. Quarterly earnings were up only 3.7% year over year.

General Electric Co. (GE) is obviously not a pure play in amusement parks, but it owns 80% of NBC Universal [Vivendi (VIVEF.PK) owns the other 20%], which owns Universal Studios, which owns the Universal Studios Theme Parks that include Universal Studios Hollywood, Universal Studios Florida, Islands of Adventure, Universal Studios Japan, Universal Studios Singapore, Universal Studios Dubai and Universal Studios Korea [the last three are projects in process]. The P/E is 18.65 and the PEG is 1.7, with a yield of 3%.

Author owns DIS.

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