This stock is up 27% and still rising

Theme park operator Cedar Fair is the best house in a fantastic neighborhood.

By Jim Cramer May 14, 2013 9:16AM

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Arrow Up © Nicholas Monu iStock Exclusive Getty ImagesNot all businesses are created equal. Some are simply better than others. That's what I kept thinking about Monday night on "Mad Money" after I interviewed Matt Ouimet, the CEO of Cedar Fair (FUN) -- with that fabulous ticker symbol, FUN. Shares of this company, with a 5.85% dividend yield, have already advanced 27% this year. I think it has a lot more upside to come, as well, simply because the business is routinely underestimated by all involved.


It shouldn't be. The business is just too great for anyone to ignore the stock here.


Cedar Fair is one of three pure play theme parks in this country, the other two being Six Flags (SIX) and the newly minted SeaWorld (SEAS). All of them offer above-average payout yields, but FUN has the most upside from earnings right now, simply because it's got the best and least recognized earnings power.


Shares of SeaWorld, which just came public, have already risen more than 30%. At the current price, this stock will have an appreciably lower yield than Cedar Fair, even with what could amount to a very similar growth rate. Six Flags, which is up a similar 27%, is set up for a good year. But it has not put through the innovations that Cedar Fair has put in -- both in rides and in technological infrastructure -- and, again, it has a lower yield than Cedar Fair.


That's why Cedar Fair is the best house in a fantastic neighborhood.


It wasn't always like this. Theme parks used to be terrible investments. There were too many of them. They were too labor-intensive. They were too seasonal. Their balance sheets were often loaded with debt, as anyone who remembers the pre-bankruptcy Six Flags.

Now they are all very well-capitalized. Cedar Fair's the best on that score, too, and these parks have become destination vacations for the value-conscious consumer -- which, after the Great Recession, is just about everyone. Plus, the season, through aggressive promotion, has been extended from Labor Day to Halloween at almost all of the non-Southern parks in the country. That means much better cash flow.


It also helps that there's just not enough land left to develop that many more competing parks. Meanwhile, the existing mom-and-pop shops have almost all folded up shop.


Cedar Fair has defied skeptics for years. I had recommended the stock when it was in the teens because my co-writer Matt Horween suggested the company was a cash machine that people simply weren't looking at correctly.


Nice score!


Anyway, despite the rally, I believe it's absurd to think that FUN, with that 5.85% yield, is done going up. I believe estimates are already too low, courtesy of what we learned Monday night in the interview. Cedar Fair had its greatest one-day opening in history -- at its Cedar Point park -- because of a new attraction, the GateKeeper, which was featured on "Good Morning America."


Numbers too low, yield too high vs. the other players -- and, yet, a better balance, sheet: What's not to like about FUN?

 

cramer

 


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.

 

 

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58Comments
May 14, 2013 9:30AM
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This isn't a bad play - these places rake in the cash from concessions and their labor costs are minimal.   As far as them being a vacation-destination, I don't see much of that.  Most people who attend theme parks (outside of Orlando) usually go for the day and return home.  And while FUN operates 5 hotels, they make most of their revenue from their amusement and water parks.  One peculiar aspect to FUN is their net profit margin, which is less than 10%, compared to SIX, who operates at a 40% margin.  Like most everything else at this point, these stocks are trading at 52 week highs.
May 14, 2013 12:22PM
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".It will blow over"

 

Why would you want the administration intimidating journalist to blow over? What kind of USA citizen would turn a blind eye to that?

May 14, 2013 9:57AM
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Actually... Cedar Fair is exactly as printed-- a well-run company with great properties in areas where families, couples and groups can reach at generally affordable prices. The cost to fly and stay is now beyond the average wage-earner's reach.
May 14, 2013 9:54AM
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Well if we are approaching the next recession (like many say) then won't anything tourism related get hit double?  Is he recommending we get in at the top of a stocks price again?
May 14, 2013 10:42AM
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Grampa now GGrampa.....Usually likes to buy tickets and watch the line standers from a shade tree on a bench....Legs and Back you know..?

 

And he ain't gonna ride anything called the "Gatekeeper", that only means one thing to me....

A Three-Headed Dog and Monster..

 

I wander around looking for an "Innkeeper" that has a "Barkeeper"; Where all the other Oldies and Fraidy Cats hang out...Hotdog and Mug of Beer, $15 bucks...

But Grandma,(Miss Lilly) likes to ride the rides......Wahooooooooo!!!!

May 14, 2013 10:46AM
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Ya I hope to go to Cedar Point this year now that I think of it.  Haven't been since 2000, much has changed, love the big rides.  I like to go the last week of August, you Americans are back in school (assuming there will be school in Detroit this year?) and the lines are short!!!
May 14, 2013 10:24AM
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Let the big boys eat it this time.
May 14, 2013 10:37AM
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Nice opening this morning, a lot of buying going on as of right now...We are up about 62 on the Dow and 11 on the S&P, however, also remember its only 1030 hrs in the morning...Lets remain cautiously optimistic; things can always change in a NY minute down here....Never forget that not everyone down here is delighted when we are up...More later.
May 14, 2013 11:53AM
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Barry, your hopes for an Obama waterloo are crazy.It will blow over.This isn`t Nixon you`re

talking about.4 Americans died in a snake pit country.This isn`t 3000 dying on 9-11.If

9-11 happened on a Dem watch our right wing media would call for impeachment the

same day.All the far right has is Benghazi and crazy conspiracies about Obama going

after the TEA PARTY.

May 14, 2013 3:30PM
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Very good day so far, buyers have been hanging in there nicely....Don't take for granted these last 35 minutes or so though; like we always say, anything and everything can happen down here in a NY minute...We are finding a bit of resistance but hopefully will break triple digits...Nothing of course is certain.
May 14, 2013 5:03PM
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Well Well ABS running his mouth again ! Maybe you should try writing you entries in English !   DIE BANK OF AMERICA DIE ! How is that Barry ! Sure you feel all WARM AND FUZZY !
May 14, 2013 11:25AM
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Pump and dump,  better check yourself before  you wreck yourself.
May 14, 2013 10:26AM
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Cedar Fair (FUN) being @ $44 apx....Is interesting, it's breaking new ground with higher and higher price...

Looking at a 10 year Chart (available here on MSN)...Might be a much better play in December...?

Off Season ??

Dec...2011 @ about $22.20

Dec...2012 @ about $32.50

Although it did crater in May of 2012 @ $25.50

Personal opinion, I think it demands more research and consider buying on a dip or lows..??

Instead of $44.....Even an article in January, would have given this some thought, considering it's historical averages...5 months later, Jim..!!  Up today about 3% early on.

May 14, 2013 12:42PM
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Obama is drunk with power. He is not handling it well. The problem with a drunk is they only get worse........... It is up to the enablers to force them to face the problem. Quit enabling the sickness. Until the very liberal quit turning a blind eye to the abuse it will just get worse.
May 14, 2013 1:42PM
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Hey ABS... what does any of your SPAM that you've been posting here have anything to do with Cedar Fair?
May 14, 2013 2:40PM
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Don't forget, the one functional republican who actually has a shot at the office, NJ Gov Christie, will be shunned by his entire party. 

 

he's too practical and realistic a person to fit the party goals

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Someone is taking money off the top before these theme parks report profit. At like $40 to $80 a ticket for one day and the parks having been in existence for years (meaning pretty much paid for) and labor at minimum wage. These parks are huge money makers. However someone's hand in in the till as they should be producing about $30 to $70 per visitor.

 

If you could get the operators from stealing the money and have them pay it out as dividends these guys would be paying like 50 percent dividends each quarter.

May 14, 2013 9:57AM
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I woke up on couch middle of night, with Bobo talking to Matt Quimet, CEO of Cedar Fair(FUN)..

No need of a rehash for me..?

 

Nice yield of almost 6%, but already FUN is up 27% this year ??

Bobo,Bobo....Grab those two Lemmings over there, before you jump.!!

May 14, 2013 1:52PM
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Barry, you`re always right.We need more hate and less compassion.We need

you in public office.The first thing we need to do is scrap the Constitution and then

bring back public executions.

May 14, 2013 12:53PM
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Sorry, Benghazi.....In the "greater scheme" of things or life...REALLY isn't much...

Problem with Republicans, is they hang their hats on Crap like this....Big mistake, IMO.

 

Never heard the "gun-running" story of the Ambassador before  ?? Conspiracy ??

Could have Credibility ??

Wasn't he at another Post somewhere in Africa?

Africa is notorious for corruption...

And could explain the "low level of security" in such a shidthole....Of Chaos.

When you are "thicker than thieves", sometimes your guard is dropped too low, momentarily.??

I see the whole situation as being somewhat strange, were we there supplying rebels off record.??

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