Beat The Heat This Summer With These Stocks
Bob is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As the Fourth of July comes and goes, we’re now officially entering the dog days of summer. Scorching heat waves can make the summer months difficult, but as investors, we’re also presented with opportunity.
The temperature will hit triple digits in many parts of the country, and as a result millions of people across the nation will look for ways to beat the heat. Here’s three companies whose products do just that, and at the same time may provide your portfolio with red-hot profit potential.
Stocks to help you stay cool and your portfolio stay hot
First, it’s apparent that a full slate of blockbuster movies seems to roll out each and every summer. This summer is no different, with movies like Iron Man 3 and Man of Steel hitting the big screen. Millions of people seeking respite from the high temperatures flock to the movies, which translate into big profits for IMAX Corporation (NYSE: IMAX), the company behind the namesake IMAX entertainment technology.
The company’s success was on display in the first quarter, as IMAX reported 3% higher income from operations, year over year.
Moreover, IMAX has charted a growth trajectory for itself outside the United States. Earlier this year, the company announced agreements to open new IMAX theatre systems in Russia. Since IMAX first entered Russia in 2003, the nation has become IMAX’s third-largest market and one of its fastest-growing markets across the globe.
If going to the movies isn’t your preferred method of beating the heat, there’s always the local amusement park. That’s where Cedar Fair LP (NYSE: FUN) comes in, the operator of amusement and water parks in the United States and Canada.
Cedar Fair is a very interesting choice, particularly for income investors. Cedar Fair is classified as a limited partnership, meaning the company enjoys a favorable tax treatment in exchange for distributing the bulk of its cash flow to investors.
Indeed, Cedar Fair does just that. The stock’s $2.50 per share annualized distribution yields 6% at recent prices. Furthermore, Cedar Fair has the underlying growth to cover the generous distribution. The company’s first-quarter revenues soared nearly 50% year over year, and the company expects more than $1 billion in full-year revenue and at least $400 million in adjusted EBITDA in 2013.
Last but not least, there’s always a cold adult beverage as a means to stay cool. Of course, the giant in the industry continues to be Anheuser-Busch InBev (NYSE: BUD), which holds a 47.6% market share of U.S. beer sales to retailers and a $145 billion market value.
AB-InBev's full year 2012 results are indicative of what you would expect from a giant company operating in a relatively mature market. The company’s volumes increased 1% last year, and revenue in the most recent fiscal year inched up less than 2% year over year.
That being said, AB-InBev holds Budweiser, one of the most valuable brands in the world, alongside a huge product portfolio. AB-InBev has been very active in the mergers and acquisitions space in recent months. The company purchased the remaining portion of Groupo Modelo that it did not already own, for $20.1 billion. AB-InBev now has a portfolio of approximately 200 beer brands, including Stella Artois, Becks, and Michelob, in addition to Budweiser and Corona.
The Foolish takeaway
The next time you go see a movie, head to a theme park, or enjoy an adult beverage this summer, remember that there are stocks that can be bought to keep your portfolio running hot from your desire to stay cool.
Specifically, IMAX, Cedar Fair, and AB-Inbev offer products and services designed to give consumers a reprieve from the scorching temperatures, and they’re hugely successful in doing so. Each of these companies is highly profitable and has rewarded their shareholders handsomely in recent months. If you add these stocks to your watch list, you'll give yourself the potential for returns that rise right alongside the temperature during these hot summer months.
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Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Imax. The Motley Fool owns shares of Imax. 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!