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Rollercoaster Revenues

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Q2 earnings season is upon us.  Most of us are accustomed to the ups and downs of the market during this time.  While sometimes frightening, the thrill often brings us back for more.

Herein lies the same theme, if you will, with theme park stocks. This is a seasonal industry.  Its revenue charts seem to replicate the very rollercoasters they’re known for.  A summer bounce across the recreational service sector may be primed by such amusements.

Reflecting this, the Leisure and Recreational Services Industry climbed +92 positions this week to sit at a Zack’s Industry Rank of #115 out of 259 industries. The industry demonstrated 14 positive earnings estimate revisions compared to 9 negative revisions, with an average positive Earnings per Share (EPS) surprise of +14%.

Several different attractions are included in this category, including movie theaters, concerts and cruise lines.  Looking closely revealed specific strength in amusement parks. And two well-known amusement park companies stood as tall as their rollercoasters.  Overcoming high price-to-earnings ratios, these two amusement park stocks seemingly have further to climb before the summer is over.

Both of the following businesses have been upgraded this week to a Zacks Rank #1 (Strong Buy). An upward lift in rank from a Buy or Hold to a Strong Buy signals a given stock may be on a path higher following future positive earnings estimate revisions. 

Researching these factors when devising your investment strategy can add additional understanding, both to the fundamental direction a company is taking, and the industry trends affecting similar businesses.  Theme-park operators have been revised upward in this fashion.  Both stocks also hold a long-term Zacks “Outperform” rating.

We encourage putting your hands in the air during the climb.  But remember: keep your eyes open for a drop.

Six Flags Entertainment (SIX - Free Report)

SIX was upgraded to a Zacks Rank #1 (Strong Buy) on July 12.  Its next expected earnings report is on July 22, 2013.

Six Flags Entertainment Corporation owns and operates regional parks comprised of theme, water and zoological parks offering rides, water attractions, concerts, shows, restaurants, game venues and retail outlets. The company holds long-term licenses for theme park usage throughout the United States, Canada, Mexico and other countries for certain Warner Bros. and DC Comics characters.  Drawing additional publicity this year, its theme park in Texas set a Guinness Record for tallest swing ride. Six Flags Magic Mountain in Los Angeles added “the world’s tallest and fastest looping coaster.”

SIX pays a hefty dividend of 4.9%. Their most recent quarterly earnings surprise was +19%.

Cedar Fair (FUN - Free Report)

FUN is a Zacks Rank #1 (Strong Buy).  It moved up from a Zacks Rank #2 (Buy) just last week.  This company reports quarterly earnings on August 8, 2013.

Cedar Fair, L.P. and its affiliated companies own and operate five amusement parks: Cedar Point, Knott's Berry Farm, Dorney Park & Wildwater Kingdom, Valleyfair, and Worlds of Fun/Oceans of Fun.  The company also owns and operates four hotel facilities.  Finally, Cedar Point owns and operates the Cedar Point Marina, one of the largest full-service marinas on the Great Lakes.  The company recently reaffirmed 2013 guidance on earnings, based on positive early-season attendance and per-capita revenue.

FUN most recent earnings surprise was +24%.  This stock pays a hefty 5.9% dividend.

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