Cedar Fair is FUN

Often the best theme park is the one nearest you. While Disney and Universal have great theme parks, they're not very convenient if you don't live in Florida, California, Paris or Tokyo. For many, they become once in a lifetime vacations. But everyone loves theme parks and want to attend them several times per year. That's where the regional theme parks excel. Cedar Fair has parks throughout the United States and for many who want to visit, they're within a couple hour drive. That makes for repeat business and the sale of annual passes.

Cedar Fair a publicly traded partnership headquartered at the Cedar Point amusement park in Sandusky, Ohio. The company owns and operates eleven amusement parks, three outdoor water parks, one indoor water park, and five hotels. Cedar Fair also manages Gilroy Gardens under contract with the city of Gilroy, California.

Theme parks are primarily a three season business strategy but if bought at the right price they can be a very lucrative investments. Cedar Fair may be the better investment in this category but there are other competitors in this space to include Six Flags Entertainment Corporation. 
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​Cedar Fair, L.P. owns and operates amusement and water parks, and hotels in the United States and Canada. As of February 17, 2016, the company operated 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 located 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.
​(Summary) (Company) (Chart)
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​12 June 2016
Price $58.95
1yr Target $66.00
Analysts 8
Dividend $3.30
Payout Ratio 126.43%

1yr Cap Gain 11.95%
Yield 5.59%
1yr Tot Return 17.54%
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P/E 22.57
PEG 0.89
Beta 0.72
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​EPS (ttm) $2.61
EPS next yr $3.78
​Forward P/E 15.61
EPS next 5yr 25.43%
1yr Price Support $96.12
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​Market Cap $3.31 Bil
Revenues $1.25 Bil
Earnings $147.60 Mil
Profit Margin 11.76%

Quick Ratio 0.50
Current Ratio 0.60
Debt/Equity ---
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​1yr RevGR 6.55%
3yr RevGR ---
5yr RevGR ---

1yr EarnGR 6.98%
3yr EarnGR ---
5yr EarnGR ---

​1yr DivGR 10.00%
3yr DivGR 9.59%
5yr DivGR ---

ROA 7.20%
ROE 431.40%
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​History

​Cedar Point opened in 1870 as a recreational area and belonged to the Cedar Point Pleasure Company. The company remained static yet exciting for almost 100 years.Then, in 1978, Cedar Point acquired Valleyfair. The name Cedar Fair was then derived from the names of both  of these parks, "Cedar" coming from Cedar Point and "Fair" coming from Valleyfair. Cedar Fair was founded in 1983 and went public on April 29, 1987.

The first acquisition of the new Cedar Fair company came in 1992 when Cedar Fair bought Dorney Park. Cedar Fair next bought Worlds of Fun in 1995. One of the company's biggest acquisitions came in 1997 when Cedar Fair bought Knott's Berry Farm from the Knott family. This marked the first time Cedar Fair operated a year-round amusement park. Several new water park properties named Knott's Soak City have since opened around Southern California including Buena Park in 1999, Chula Vista in 2000 and Palm Springs in 2001. 

Michigan's Adventure in Muskegon, Michigan and was purchased for $27.6 million in 2001 and then Cedar Fair opened their first indoor water park in November 2004, Castaway Bay. It replaced the former Radisson Hotel and is open year-round.

The biggest acquisitions have occurred more recently starting in 2004 with the acquisition of Six Flags World of Adventure for $145 million and then changed its name back to it's original name - Geauga Lake. In 2011, however, the water park's name was shortened to Wildwater Kingdom.

On May 22, 2006, Cedar Fair announced they had outbid competitors and intended to purchase all five parks in the Paramount Parks chain, including Star Trek: The Experience at the Las Vegas Hilton and the management agreement of Bonfante Gardens. On June 30, 2006, Cedar Fair announced that it had completed its acquisition of Paramount Parks from CBS Corporation in a cash transaction valued at $1.24 billion USD. Shortly following the transfer of ownership, Cedar Fair began the process of integrating the two companies by eliminating the Paramount Parks corporate office in Charlotte, North Carolina and transferring all decision-making to Cedar Fair's offices in Sandusky, Ohio. With the purchase of the Paramount Parks, Cedar Fair changed its name to Cedar Fair Entertainment Company.

Cedar Fair began removing the Paramount name and logo from the parks in January 2007. The names of the parks were changed back to their original pre-Paramount names with the Cedar Fair corporate logo added. They also changed Bonfante Gardens to Gilroy Gardens. All these changes were made before the beginning of the 2007 season.

On June 20, 2011 Cedar Fair announced that Matt Ouimet would become the new CEO of Cedar Fair. Previously Mr Ouimet was employed by The Walt Disney Company for 17 years and served as president of Disney Cruise Line and president of the Disneyland Resort.

Cedar Fair launched new websites for their parks in 2012 as well as a new marketing campaign, Thrills Connect. On November 20, 2012, Cedar Fair announced they had sold its Knott's Soak City: San Diego location to SeaWorld Parks & Entertainment. About nine months later, Cedar Fair announced it had sold its Knott's Soak City: Palm Springs location to CNL Lifestyle Properties.

​My Perspective

For anyone who has read a few of the articles I've written in the past knows my affinity toward media and entertainment companies. As I've written about many times before, I believe that in the future a majority of consumer's income will be spent on entertainment and therefore I expect that those companies able to produce that entertainment will be the beneficiaries of a large proportion of the population's consumption dollar. And I expect that to continue throughout the world as the world economies expand and grow their middle class.

Therefore, companies like Cedar Fair are very appealing to me. But I also like to buy companies when they're on sale. While I wouldn't classify the current price as expensive, I wouldn't classify it as cheap either. I would like to buy this stock closer to a P/E of 20 which would put the price closer to $52 per share. That would also raise the one year estimated return above 25% and would make this security very appealing. Add in a 5% dividend growing at 10% per year and this company could end up being a very lucrative investment.

I intend to start a position in this company at a price somewhere between $52 and $55 per share. As always, I intend to start with a small position, add to that position through dividend reinvestment, the sale of call options and additional open market purchases as price dictates.
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