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FUN at the Fair

05/24/2017 2:50 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

With your portfolio now flush with cash, let me suggest that you put some of those proceeds to work in Cedar Fair (FUN), explains growth and income expert Mark Skousen, editor of Five Star Trader.

A publicly traded partnership based in Sandusky, Ohio, Cedar Fair is one of the world’s largest regional amusement-resort operators. The company owns and operates 11 amusement parks.

They include its flagship Cedar Point amusement park, along with two outdoor water parks, one indoor water park and five hotels. It also has a management contract to operate an additional theme park.

For obvious reasons, the theme park business thrives in the summertime. Not only are kids out of school, but the warm weather also boosts attendance at outdoor amusement centers and water parks. Cedar Fair is only just heading into its peak season.

Several of its early opening seasonal parks have already gotten off to a strong start. For example, Kings Dominion, based in Richmond, Virginia, had its best April in years. And Carowinds in Charlotte, North Carolina, had its strongest spring-break week in the park’s history.

With employment and wages up, consumers have more money to spend. That means sales and earnings should beat the consensus estimate over the next couple of quarters.

The Street expects Cedar Fair to earn $3.55 a share this year and $3.81 in 2018. But I expect both numbers to come in at least 10% higher.

Plus, you will be well paid along the way. Cedar Fair’s current dividend yield is 4.9%. As sales and earnings ratchet higher in the weeks ahead, so will the dividend -- and the share price.

So pick up Cedar Fair at market. And place a sell stop at $58 for protection. If you prefer to play this one more aggressively, try the September $75 calls, which last traded at $0.49 and expire on Sept. 15.

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