Cedar Fair, L.P. (FUN): Which Theme Parks are The Most Fun for Investors?

What I like about Six Flags is its relatively low financial leverage, with the net debt/EBITDA at around 3. Moreover, Six Flags has just recently emerged from bankruptcy in 2010, so it recorded a lot of NOLs (net operating loss carryforward). The NOLs could save the company from paying taxes in the next five years or more, allowing the company to return more cash to shareholders. Looking forward, Six Flags expects that it could deliver as much as $500 million in adjusted EBITDA, or around $6 of cash EPS by 2015. At the current trading price, Six Flags also offers investors a juicy dividend with a high yield at 5%.

My Foolish take

Theme park companies could be considered cyclical and capital-intensive businesses. It is not very easy to reduce their high fixed operating costs, so instead the businesses should be focusing on raising revenue by attracting more people to the parks to sell more tickets and more food & beverages. I personally do not think that it is a good business to own in the long run. If investors are craving for good yields, they should choose Cedar Fair among the three, due to its highest dividend yield, reasonable leverage and the lowest valuation.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Which Theme Parks are The Most Fun for Investors? originally appeared on Fool.com and is written by Anh HOANG.

Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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