Spend Your Summer With These Theme Parks
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Editor's Note: This post has been amended to remove an incorrect passage. Motley Fool apologizes for the error.
Walt Disney (NYSE: DIS) just delivered a gift to all theme park investors by raising admission prices to its theme parks across the board. Other theme-park operators are expected to follow suit as well, boosting their bottom lines. This will benefit the shareholders of Six Flags (NYSE: SIX), Cedar Fair (NYSE: FUN), and SeaWorld Entertainment (NYSE: SEAS).
The house of mouse
Disney's theme park division is its second-largest after its media channels, which include powerhouse ESPN. In the most recent quarter, Disney reported that the theme parks earned $383 million, a 73% jump from the prior year. Disney raised single-day admission prices as much as 9.6% at its theme parks in California and Florida. Prices for multi-day tickets and annual passes also rose. These price increases will go straight to the bottom line and boost profits further at its theme parks. Disney is implementing these price increases just ahead of the busy summer holiday season.
The best part about this move is that you're not going to hear many families canceling their Disney vacations because ticket prices went up a few dollars. Disney's theme parks have long been a barometer of the health of the overall economy. As more visitors go to Disney parks and spend money, it's a strong sign that the U.S. economy is doing much better.
Raise your portfolio with Six Flags
Six Flags owns 18 theme parks; 16 in the U.S., one in Mexico, and one in Canada. Ever since the company was reorganized under Chapter 11, it has been a stellar performer as it was able to greatly reduce its debt load. In the past year, the stock is up more than 53%.
The best part about Six Flags owning so many properties is that each park is within driving distance for millions of people. Its parks get a steady stream of day-trippers that visit a Six Flags more than once a year. Its parks offer a little bit of everything for everyone from kid rides to thrill rides to water rides for cooling off in the summer heat.
Ever since CEO Jim Reid-Anderson has taken over the company, he has done a great job in running it. He has successfully promoted the company online and the company gets 44% of its revenue from season passes. Because of the bankruptcy, Six Flags is able to offset its profits with prior losses. The result is that the company is paying out its profits to shareholders with its 4.8% dividend yield. For most Americans it's a bargain as a one-day vacation spot and a bargain for investors as well.
It's fun to own Cedar Fair
Cedar Fair has been a fun ride for investors. The stock is up almost 56% in the past year. The company owns 11 theme parks including Knotts Berry Farm in California and King's Dominion in Virginia. Two-thirds of the visitors to its parks live within 100 miles of each park. Cedar Fair's parks attract the guest looking to take a road trip for a day of fun.
CEO Matt Ouimet has done a great job of creating customer loyalty. At Knott's Berry Farm in California, which is only six miles from Disneyland, the company offers a payment plan for its guests. Annual passes cost $72 and are payable in six monthly installments of $12 each. This really helps a family on a budget. As incomes improve, the customers still remain loyal to Cedar Fair parks because of all the fun they had there.
For investors, all of this plays into shareholder's hands in the form of dividends. Cedar Fair pays an annual dividend of $2.50 per share for a yield of 6.1%. With dividends like that, it's fun to own Cedar Fair shares.
Ride the wave with shamu
SeaWorld owns 10 parks in the United States including the Busch Garden amusement parks in Tampa, Fla. and Virginia along with SeaWorlds in Orlando, Fla., San Antonio, and San Diego. SeaWorld has performed well, rising from its IPO price of $27 in April.
CEO Jim Atchison has been with the company for nearly 30 years. He started out as a parking lot attendant at Busch Gardens in Tampa, Fla. He stayed with the company and worked his way up. Safe to say he knows every aspect of SeaWorld's operations and that I like.
SeaWorld's newest attraction is Antarctica: Empire of the Penguin. On opening day, visitors waited up to four hours to view more than 230 penguins. New attractions coupled with the park's most famous resident, Shamu, keep visitors coming back.
SeaWorld actually beat Disney to the punch in raising ticket prices. In January of this year, the company raised the price of an annual pass at its Orlando, Fla. park by 24% to $149. With four hour waits to see the penguins in Orlando, Fla., it looks like the price increase didn't slow visitors from coming.
Even thou the stocks have been on a roll over the past year and parks have raised their prices, visitors and investors alike remain attracted to theme parks and their stocks. I know some investors have been waiting for a pullback and wanting to buy the dip, but with summer already here, the lines are going to be long at the theme parks and profits will be rolling in. The dip investors are waiting for just might not happen.
It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!