Six Flags vs. Cedar Fair: Which Thrill-Park Company Gives Investors a Better Ride?


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The stock market has been a roller-coaster ride this month. Maybe amusement-park operators can turn wild rides into wild stock gains. Let's compare two publicly traded regional amusement-park operators who are battling for market supremacy: Six Flags (SIX) and Cedar Fair (FUN).

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Just a few years ago, it would have been financial heresy to side with Six Flags (SIX) over Cedar Fair. Remember, Six Flags is the chain that beat the geriatric Mr. Six character and the Vengaboys' "We Like to Party" song to the ground. It was the bumbling park operator that couldn't turn an annual profit because of its gargantuan debt load.

Cedar Fair, on the other hand, was the slick high-yielding partnership that was as consistently smooth as its amazing Millennium Force coaster that watches over the Lake Erie coastline in Ohio. While Six Flags is on its third management team in six years, Cedar Fair is just months away from its first change at the helm in ages.

Keep Your Seatbelt Fastened

But while it took a painful bankruptcy reorganization to make it happen, Six Flags has changed for the better. The new and improved thrill-park chain returned to investors last year with a refreshingly leaner balance sheet.

Cedar Fair, on the other hand, is now struggling with the sizable debt it took on in acquiring the Paramount Parks chain a few years ago. Activists are also hounding the company to mix things up and make distribution promises that its cash flows may not be able to keep.

Still, yield chasers love Cedar Fair. Although it whacked its fat dividend during the recessionary lull, it's promising to distribute $1 a share to its investors this year and $2 a share come 2012. The problem is that this is a high hurdle to clear for a company struggling with meandering growth this season.

Cedar Fair grew its revenue just shy of 3% in its latest quarter. Six Flags is growing faster as we head into the telltale summer quarter. Six Flags also posted better than expected bottom-line results than Wall Street was expecting during the second quarter. Cedar Fair came up short.

Enjoy the Ride

Neither company can match the 12% top-line spurt that Disney's (DIS) theme parks and resorts managed during the same three months, but that gain was fueled -- in part -- by Disney adding a third cruise ship to its growing fleet. Six Flags and Cedar Fair are for landlubbers, water parks notwithstanding.

I've made several visits to Cedar Fair's Knott's Berry Farm and Cedar Point amusement parks over the years. I'm a fan. However, as an investor, it looks like it's time to give Six Flags a shot.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney. He was at Six Flags Great America and Cedar Point in June. Motley Fool newsletter services have recommended buying shares of Disney.

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