Top Picks 2007: Fun at the fair with Sy Harding

Posted Dec 30th 2006 8:30AM by Steven Halpern
Filed under: Newsletters, ETF Investing

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Stocks Report.

Cedar Fair, LP (NYSE: FUN) is the top conservative stock pick for 2007 from Sy Harding, editor of Street Smart Report. He explains, "With its recent $1.2 billion acquisition of Paramount Parks from CBS Corp., Cedar Fair now operates 17 popular regional theme parks, and five water parks, in 13 states in the U.S. and one province of Canada.

"Cedar Fair is noted for exciting rides, with roller coaster enthusiasts traveling the Cedar Fair circuit on a regular basis to check out the latest offerings. For instance, its Cedar Point Park in Ohio now offers 65 rides and 16 roller coasters, including Top Thrill Dragster, the world's tallest and fastest coaster, and Millennium Force, the world's top-rated coaster for thrills.

"Thrill rides for the brave, water slides, wave action pools, and the like, are only a portion of the magnetism for customers. The parks are family oriented, with attractions for smaller children themed around the 'Peanuts' comic strip characters, and a variety of upscale hotels and restaurants for parents.

"Organized as a limited partnership, the company must pay out most of its earnings to investors. Revenues have increased in each of the last ten years, as have those earnings distributions. At the current price the distribution is the equivalent of a 6.9% yield.

"With the high price of gasoline and frustrations encountered at airports, the large destination type theme parks are seeing a drop-off in head counts, particularly from foreign countries. Cedar Fair's positioning with regional theme parks, each within a few hours drive of large population centers, is benefiting from those same conditions.

"Much of the partnership's growth over the years has also been boosted by acquisitions, and we expect those will continue. With a multiyear growth record, a P/E ratio of 17.5, and a 6.9% yield, we believe Cedar Fair is a good choice for 2007. Target 35."

To see Sy's favorite speculation for 2007, click here.