Welcome to my blog about all things money! I've been helping investors make money for almost 30 years. Here, I share my investing and financial expertise to help you make the most of your money so that you can attain all of your financial goals and ensure that your golden years are truly "golden".
Come here for sharp, unbiased analysis of the events that shape global economies and markets; find new investment ideas; and learn the best techniques to manage your money for maximum profits!
Thursday, April 4, 2013
Ramp up your “Fun” Quotient
I’ve always loved stocks that bring out the kid in me, and
when I fired up my search engines this morning, I lucked out! I’ve found three
excellent companies with growing earnings, nice dividends, and appealing
technical indicators—all in the entertainment industry. It’s a category that
just loves summer, when families flock to leisure activities. And with the
economy improving, all indicators are that this sector will have a bonanza
And adding an extra dollop to these companies appeal—for
me—is the fact that they are midcap stocks—one of my favorite hunting grounds.
I love the small- and mid-cap universe, as they are usually
companies who specialize in a few products or services. That area of investing
offers several advantages for investors, including:
·It makes their financial statements more
visible, so that you can easily see early warning signs of impending trouble.
No need to wade through scores of subsidiaries, trying to figure out how their
fortunes affect the consolidated company, or if they are the next “Enron” in
·These are the sorts of companies whose expertise
in their industry or niche is very often attractive to larger businesses that would
rather buy them than try to copy and compete with them. And that usually means
a nice premium for their shareholders.
·They are often “undiscovered stocks”—not because
they are speculative, but because they aren’t large enough yet to need Wall
Street’s money, so they aren’t on the buy list at the majority of brokerage
houses. That means you can buy them at discounted prices, and when they do
begin attracting the attention of the analysts and institutions, their stocks
In the past, many of these types of companies offered great
potential for share appreciation, but not much in the way of dividends. I’m
happy to say that scenario has changed—and for the better.
Right now, a whopping 40% of the stocks in the Russell 2000
Index pay dividends—the highest level since 2006, according to a recent report
by Bank of America Merrill Lynch.
The rising tide of dividends should help encourage more of
those investors who are still on the sidelines, to come out and play. It’s a
shame that many folks have missed this incredible run-up in the markets, but
it’s not too late to get in and get your share of the upside.
And my three picks today should satisfy even the wariest of
investors. They each have the potential for some nice share appreciation—as
well as healthy dividends to line your pocket along the way.
The first stock is a company that I’ve known for many years.
It’s been in and out of my portfolio more times than I can count. It has a
special place in my heart, as my mom used to take my brother and me to their
flagship amusement park during the long, humid summers in Ohio.
The company is Cedar Fair
(NYSE: FUN), and it owns 11 amusement parks, 4 outdoor water parks, 1 indoor
water park, and 5 hotels around the nation, under names such as Great America,
Worlds of Fun, and Cedar Point (my childhood stomping grounds!) It is
structured as a limited partnership, which means it has to pay out the majority
of its earnings to its unit holders. FUN just increased its dividend by 50%.
And right now, the company’s yield is 6.40%; the shares are trading at $40 and
change, and I think they can go up to $48.
Next is Six Flags
Entertainment Corporation (NYSE: SIX), the world’s largest amusement park
operator. It’s the owner of 18 theme parks, primarily in the U.S., but also a
couple in Mexico and Canada. This is a turnaround story, with the company
recently posting record earnings. Another great dividend payer, with a yield of
6.38%, the shares recently hit their 52-week high, but the parks are headed for
a fabulous year, so I think there’s more appreciation to be had—up to around
$85 per share.
Lastly, it’s not an amusement park, but it’s definitely a
leader in the leisure space. The company is Ryman Hospitality Companies (NYSE: RHP). It owns the fabulous
Gaylord Hotels, whose Orlando hotel was the site of the World Money Show last
month. The company—headquartered in Nashville, TN—has a big presence there with
the Ryman Auditorium, the General Jackson Showboat, the Grand Ole Opry, and
another Gaylord hotel and convention center. It has the largest number of top
10 convention hotels in its industry. And with its new deal with Marriott, the
company has access to the Marriott Reward customer base—more than 40 million
members. Ryman has just converted to a Real Estate Investment Trust, so look
for dividends to keep on rising. It currently has a 4.4% yield. And trading
around $44, I think it can easily rise to $60.
While the shares of each of these companies has been on the
rise, I don’t think you’re too late to get in now, enjoy the dividends, and
expect additional appreciation in the next few months. And they are the perfect
way to add some “fun” to your portfolio.