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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95Comments
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 3:53PM
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LOL - Another physco just showed up !
Yes, it's perfectly NORMAL to repeat the same DIE , MANTRA,  DIE  on each and every post and in CAPS too !
No, nothing wrong with that. No "anger management" problems either , Regalman
All quite normal.
Wouldn't you just love to leave your kids with this Saint ?
I often wonder, WHO exactly should die ?
Is it the President or CEO ?
The VP's ? ALL of them - or just a few ?
The tellers ?
Janitors ?

Don't you wish this ST would be more specific in his death wishes ?
ahh the looony , lefty, insecure , begging mind !

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 1:33PM
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Do you think Obuma will uncover who is behind this IRS scam with the same speed and accuracy that he did in "finding " the Benghazi attackers ?
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 1:12PM
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Hey Re Tog - WHY would such a sheethole deserve LOW level security ?
It's a Muslim country , they hate us , coming on 10th anniversary of 9/11,  the white house was WARNED several times , by several branches INCLUDING the ambassador and they did what ?
That's right , NOTHING. Zero.
Too busy running his mouth Bin Ladens Dead , Al Quida's in the run
We have MORE security in Paris, France THAN Libya.
Please- save the lefty talking points to more low info voters.
They will believe it. People with even half a brain and no agenda,  want the truth
Lefty liars don't want to know, wish it would all go away.
Bush Lied , people died. Ring any bells,  douche bags ?
Payback is a BEATCH !

May 14, 2013 1:23PM
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Tell the widows and fathers and mothers of the dead , it was "make believe", moron.
Tell the kids Daddy's never coming back - BUT it was all make believe and Obuma was very sleepy that night !
It was so worth it, children
AND - when they grow up without a father , they can repeat the lefty mantra over and over :
Bin Laden's Dead !
GM's Alive !
Al Quida's on the run !
It has such a soothing effect.
I'm sure they wil be SOOO pleased too !
May 14, 2013 1:06PM
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Yes, the lefty mantra now is,  "it will blow over" , "it was a long time ago" , "in the greater scheme of things" , "the whistle blowers may have mental problems" blah, blah , blah. On and on it goes
Listen, when a present and his henchman ALLOWS an ambassador and the embassy to be turned to dust, it's a big deal.
When a President and his henchman, do nothing to stop an attack, the "President" goes to bed and then REPEATEDLY lie about it. many , many , many times. All on tap[e,  all clearly visible and it wasn't Bush (unless he got a real good tan and his ears grew 4 sizes ?) it IS a big deal.
When 4 Americans dies because of incompetence it IS a big deal.
Nixon got impeached for lying under oath (Hey so did Billy Boy, too !) and for using the IRS as his personal revenge team.
Speaking of the IRS, Obuma is nailed on this too. Somehow , some low level cretin in the "Cincinnati" office decided HE was goimng to go after those evil , white Tea party people and those evil white talk show commentators ?
Completely on his own ?  No cajoling from Dear Leader , oh no.

Listen , some of you lefty cretins were KILLING Bush for 7.5 minutes, even yesterday the King of all lefty cretins "Regalman" brought up 7.5 minutes on 9/11.
HOWEVER 10 years later , our Dear Leader GOES TO BED, while we are under attack, it's all, good ?
No, no , no, you reap what you sew.
You can kiss Hillary chances in 2016 bye , bye . She's like a fart in the wind --------
Hopefully Dear Leader gets scolded and embarrassed at the least if not IMPEACHMENT which he so richly deserves.
He's NOT getting out of these 2 beauties.
.

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?
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