Six Flags Entertainment Corp (SIX), SeaWorld Entertainment Inc (SEAS) & More Summer Stocks

The stock listed at $27 per share and is up already 23% in less than one week of trading. The private equity group The Blackstone Group L.P. (NYSE:BX) bought SeaWorld Entertainment Inc (NYSE:SEAS) in 2009 and grew its revenues and profitability each year since then. In 2012, SeaWorld had $1.4 billion in revenue and roughly $77 million in net income.

Investors should be wary of SeaWorld Entertainment Inc (NYSE:SEAS) more than the others. Five of its parks are all located in one area in Florida, so it is heavily focused on local and small-regional sales. The company is highly dependent on customers traveling to its primary locations.

Also, after this IPO, SeaWorld Entertainment Inc (NYSE:SEAS) still caries a large amount of debt – roughly $1.6 billion. The company has a high level of fixed expenses for running its parks. The expenses will be high regardless of the amount of attendees. This, coupled with high debt payments, make it a risky stock to hold.

Final thoughts

The summer months may bring an increase in spending on entertainment and amusement parks. Investors should closely watch the attendance numbers and in-park spending at all three of these companies. Six Flags Entertainment Corp (NYSE:SIX) and Cedar Fair, L.P. (NYSE:FUN) are two stocks to look at buying, or at least holding for now. They have strong brands and more diversified geographic operations than SeaWorld Entertainment Inc (NYSE:SEAS). SeaWorld Entertainment Inc (NYSE:SEAS) looks like it will have an uphill battle of regionally concentrated revenues and high debt payments. This is not an IPO that I want to get involved with.

The article 3 Summer Stocks to Look At originally appeared on Fool.com and is written by Austin Higgins.

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