Entertaining The Kids Over The Holidays
Reuben is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The Holidays in the United States are marked by one thing with which all parents of school-age children have to contend—Holiday Break! For some it's a time of family, friends, and travel. For others, it's the stay-cation. Regardless of what you do or where you go, however, if you have kids they need to be entertained. This, of course, is a year-round task, but it takes center stage when school is out.
Children are an incredible source of revenue for companies. While child rearing is just a natural part of life, there are numerous stages of the process and each one comes with its own spending requirements. Thus, each one has its own little “industrial” complex. Here are a few companies that come to mind when you think of entertaining the little (and not so little) ones:
Amusement Parks and More
Dow-30 component Disney (NYSE: DIS) is one of the first companies that should come to mind when you think of kids. The company reaches virtually all aspects of a child's life and makes most customers feel good at the same time because of its wholesome image. If you want toys, there are Disney themed options for every age bracket. With the purchase of Marvell, there's now a notable option for the boys. Entertainment can be found in the movie theater or on television, including ESPN for the sports minded. Of course the Disney theme parks are there for entertainment and travel, and the Disney Cruise line for those who just want the travel.
The company is a massive player in the entertainment industry with one of the most loved brands around. It is, however, normally afforded a premium price by investors because the quality of the brand isn't a secret. This is the type of company to keep on your wish list. A yield above 2% would be a good place to buy these shares.
There are other options in the amusement space. One, Cedar Fair LP (FUN), has a largely seasonal business, but operates some year-round properties. It is a limited partnership, however, so it pays out a material distribution. While it has a long history of success in the parks industry, it is still working to digest a massive acquisition that forced it to trim its distribution. That said, the company appears to have turned the corner on the transition to becoming a much larger entity.
Amusement Closer to Home
One company that can provide amusement for an afternoon is CEC Entertainment (NYSE: CEC), the owner of Chuck E. Cheese. The restaurant chain is a mix of a pizza place and a massive game room. With security checks at the door, parents can feel reasonably safe letting their little monsters roam freely—and spend money. While the concept is wonderful, corporate performance has been a little variable. Still, it appears that there's plenty of room for CEC to expand, and its recently introduced dividend is further enticement.
Travel and heading out are great, but can be very expensive. There are a lot times when you simply have to entertain the kids at home. Today there are three logical options: Video Games, Television, and the Internet. Of course these three sometimes meld into each other and, for teens, often occur at the exact same time, but they are all mainstays.
On the game side, Activision Blizzard (NASDAQ: ATVI) is a game maker with great franchises that appears to be reasonably valued right now. World of Warcraft, Call of Duty, and Skylanders are just a few of the titles that this industry giant has to entertain the kids. Even though casual games have become the rage, with Apple's (AAPL) iPhone and all its apps, serious gamers have been driving results at Activision Blizzard for years and look set to continue doing so for years to come.
Television, meanwhile, has taken a new twist with the advent of the Internet. Sure there are the plenty of stations to watch, but adults and kids increasingly want to watch “what they want, when they want.” This is the key benefit offered by Netflix (NASDAQ: NFLX). The company is the leading provider of premium internet video content and has a huge lead on all of its notable competitors. That said, the company's business model is one that can be copied relatively easily, so some suggest that its shares are fully valued at best right now.
The Google (GOOG) and Amazon (AMZN) business models aren't unique, either, but both managed to gain such dominant positions that competitors, well, couldn't compete. There is a clear possibility that Netflix could be joining their ranks. Note that Netflix recently inked a deal with Disney to distribute Disney video content over the web starting in 2016. This pairing is notable, in that it brings together two dominant industry entities, one with content and the other with distribution. It could be a statement of Netflix' strength.
Lastly, Facebook (NASDAQ: FB) provides a service that lets its customers keep in touch, something near and dear to teenagers' hearts. While some have moved on from the service, many have simply moved to another Facebook property, Instagram. In the end, Facebook gets a lot of traffic and people spend a lot of time on the site when they go. These are important factors of success on the internet. While there have been some very public issues surrounding the company's initial public offering, including questions about its ability to make money, the shares could be buy for long-term believers.
ReubenGBrewer has no positions in the stocks mentioned above. The Motley Fool owns shares of Activision Blizzard, Walt Disney, Facebook, and Netflix and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Activision Blizzard, Walt Disney, Facebook, and Netflix. 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!