The economy is gradually reopening, providing masked customers with the opportunity to spend a fun day in the sun at a theme park. Though there is no guarantee masks will remain attached to the face while riding undulating roller coasters, the masses will undoubtedly show up at their favorite amusement parks in the months ahead.
And President Trump has indicated the economy will not close should a second wave of the coronavirus spread across the land.
This is good news for the likes of Walt Disney (DIS), Six Flags Entertainment (SIX), SeaWorld Entertainment (SEAS) and Cedar Fair (FUN).
Walt Disney (DIS)
Now that the economy is returning to normal, people will shift their attention from the popular Disney+ streaming service to Disney theme parks. The requirement to wear a mask in Disney theme parks will certainly reduce attendance yet fans of the Mickey and friend will still show up. Furthermore, the theme park giant has a much-anticipated Nintendo World in the works at its Orlando and Japan parks.
The company’s upcoming Jungle Cruise movie featuring The Rock is sure to be a massive hit. Add in the raging success that is the Disney+ streaming service combined with the company’s Star Wars films and it is easy to see why the analysts have set a high target of $137 for the stock.
The POWR Ratings are also quite complementary: #1 rank of 14 stocks in the Entertainment – Sports & Theme Parks segment highlighted by an A Peer grade. DIS should return to its pre-coronavirus trading level of $140 by the end of the year, if not sooner.
Six Flags Entertainment (SIX)
Geographic diversification has the potential to prove quite important for theme parks as countries reopen following the coronavirus outbreak. Companies such as SIX have theme parks in several different parts of the globe, ensuring business will be conducted in at least one location even if the economy is closed in another due to the reemergence of the virus.
SIX operates theme parks in the United States along with France, the Netherlands, Mexico and Belgium. The analysts have set a high forecast of $28 for SIX. Though SIX is not a POWR Ratings powerhouse (pun intended), it has a B Industry Rank along with a three-month price return of 77.09%.
SIX is set to reopen its Texas theme park on June 18 with additional sites to follow suit soon after. If the global economy reopens without a significant resurgence of Covid-19, SIX should trend back toward its 52-week high of $59.52 by the end of the year.
Cedar Fair (FUN)
Nothing says “summer” like exciting rides at theme parks and water parks. FUN owns and operates such parks as well as accompanying hotels. FUN’s amusement parks include:
- Cedar Point
- Dorney Park
- Wildwater Kingdom
- Knott’s Berry Farm
- Worlds of Fun
- Oceans of Fun
Each park is geared towards families, providing parents as well as children with an enjoyable summer experience outside of the home. Just about everyone is chomping at the bit to get out of the house after quarantine so FUN should receive its fair share of business.
The POWR Ratings rank FUN in the top half of the Entertainment – Sports & Theme Parks category, highlighted by a B Industry Rank and solid Trade Grade. The analysts have set a $36.75 price target for the stock, meaning it has 3.52% upside. Though social distancing will limit FUN ticket sales, this might be a good time to establish a long-term position in the stock.
SeaWorld Entertainment (SEAS)
For those without pools, few summertime experiences are more satisfying than visiting a water park as the planet warms to uncomfortably hot temperatures. SEAS owns and operates water parks and theme parks in markets across the globe. However, the majority of SEAS’ parks are in the United States.
Examples of SEAS properties include Busch Gardens, SeaWorld and Sesame Place. SEAS has a three-year price return of nearly 10%, a three-month price return of just under 50% and a one-month price return of 27.83%.
With an average analyst price target of $21.63, SEAS has nearly 20% upside. Look for SEAS to make quite the splash as its Florida parks reopen on June 11. Though the theme park now requires reservations along with temperature readings and face coverings, people will still show up at SEAS parks simply because youngsters are looking for something to do during the summer.
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DIS shares rose $0.35 (+0.30%) in after-hours trading Friday. Year-to-date, DIS has declined -20.15%, versus a -4.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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