Fun and Profit: Amusement Parks are Riding High

Cedar Point
Cedar Point

It's a good time to be an amusement park operator.

Shares of Cedar Fair (FUN) -- the operator of several regional amusement parks including Cedar Point in Ohio and Knott's Berry Farm in California -- hit a seven-year high on Wednesday. This summer Six Flags (SIX) hit a new all-time high after emerging from bankruptcy reorganization in 2010.

Even Disney (DIS) hit an all-time high on Thursday, though clearly there's more to the House of Mouse than its global chain of theme parks.

Amusement park companies are climbing up the coaster hill, and investors are enjoying the ride.

High Fives All Around

The industry celebrated itself last week during Amusement Today's annual Golden Ticket Awards presentation.

There weren't a lot of surprises in the winners across more than two dozen categories. Cedar Point took top honors for the best overall amusement park. Ceremony host Dollywood was tapped as the friendliest park, along with awards for its food and shows. Holiday World & Splashin' Safari -- easily the best family-friendly amusement park that you've never been to -- took the crown for the cleanest park for the 13th consecutive year.

However, in a sign of how far the industry has bounced back, Disney California Adventure was singled out as Park of the Year in the Publisher's Pick Awards.

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Disney's state-themed attraction in Anaheim was critically panned when it opened in 2001. There weren't enough marquee attractions, and the entrance turnstiles failed to click at the same feverish pace as its older sibling Disneyland did just a few yards away.

However, a $1.1 billion makeover that introduced the well-received Cars Land has turned a rare miss at the world's largest theme park operator into an inspiring turnaround story.

Operators are investing in their parks again, and it's paying off.

No Fear of Heights

We'll get a clearer snapshot of how the summer played out when Six Flags and Cedar Fair report their quarterly financials in late October and early November, respectively, and it may not be the kind of showing that investors would expect given the buoyant share prices.

Analysts see both Cedar Fair and Six Flags earning less in the third quarter than they did during last year's telltale summer quarter. Six Flags is expected to post an 8% uptick in revenue, but Wall Street's banking on a slight decline in revenue at Cedar Fair.

Investors shouldn't let that get in the way of enjoying the ride. The market is always about more than just a single quarter. Those same analysts see revenue and profitability growing at both Cedar Fair and Six Flags for all of 2012 and yet again in 2013.

After hitting recent highs the stocks may take a breather, but the long-term prognosis is as thrilling as a wood coaster on a cool evening.


Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney. He has been running an amusement park directory at since the 1990s. The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services have recommended buying shares of Walt Disney.