Cedar Fair is an operator of amusement parks. At Dec 31 2013, Co. owned 11 amusement parks, three outdoor water parks, one indoor water park and five hotels. Co.'s amusement parks include: Cedar Point, located on Lake Erie between Cleveland and Toledo in Sandusky, OH; Kings Island near Cincinnati, OH; Canada's Wonderland near Toronto; Dorney Park & Wildwater Kingdom near Allentown in South Whitehall Township, PA; Valleyfair, near Minneapolis/St. Paul in Shakopee, MN; Michigan's Adventure near Muskegon, MI; Kings Dominion near Richmond, VA; Carowinds in Charlotte, NC; Worlds of Fun in Kansas City, MO; Knott's Berry Farm in Buena Park, CA; and California's Great America in Santa Clara, CA.
In our opinion Cedar Fair has an economic moat due to unique assets and locations. FUN's theme parks are located on prime real estate with unique assets such as roller coasters, rides and water parks.
Cedar Fair appears positioned for a strong year. The majority of revenue and profits realized between Memorial Day and Labor Day weekend. Cedar spends quite aggressively on new rides and attractions, which is a vital factor in this highly competitive industry. This reflects ever-changing consumer tastes and preferences. We look for cash flow from operations (after dividend payments) to be used for debt reduction over the long run. These units are a good choice for investors seeking current income. Limited partnerships return the bulk of their profits to shareholders as distributions, and Cedar is no exception. These units yield 5.2% and we forecast a healthy 5.0% payout over the 3 to 5 years ahead. They also offer decent capital appreciation potential at the recent price.
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