Cedar Fair Is Fun, Profitable MidCap Stock

In Monday’s Guide we illustrated the fact that mid caps can be the Jan Brady of the stock market.  “Marsha, Marsha, Marsha!”  A lot of growth investors look to small caps for growth and large caps for value.  Today we look at a ‘fun’ mid cap that is by no means boring Meatloaf and potatoes.  Alright, this is a week tie in to our Rocky Horror Picture Show theme from Monday, enough of the 70’s.

Cedar Fair, L.P. (NYSE – FUN - $54.09)  has a 50-day EMA metric plotted indicating a positive short-term trend.  While summer is fading, this summer fun stock is not. 

Cedar Fair, L.P. 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.

Earlier this month the Company announced its sixth consecutive year of record breaking revenue through Labor Day weekend.  A forward P/E of 15 versus a trailing P/E of 25 is a result of analyst’ consensus estimates for an average 5% CAGR in top line growth for the next two years over 2015.  An Enterprise Value/EBITDA of just 11 also indicates real value.  Finally, one of our technical favorites, short float, is just 0.75%.

With the overall downturn in the market over the last few weeks there may be a lot of buying opportunities.  We believe it is time to ride the up side of the hill for FUN.  We think the stock gets back to $60 by the end of the year.

Have a great day!

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