Thursday's Top Upgrades (and Downgrades)

Stocks go up, stocks go down -- and so do analysts' opinions of them. This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense, and which ones investors should act on. As schools prepare for summer recess, we're focusing on the lighter side of investing, and three fun stocks that Wall Street likes quite a lot: Cedar Fair (NYSE: FUN  ) and Zynga (Nasdaq: ZNGA  ) , each upgraded to buy, and Orbital Sciences (NYSE: ORB  ) , dubbed a new outperformer by the knights at Imperial Capital.

Let the games begin.

The name says it all
And what better stock to start us off than the one whose name says "FUN" right there in its ticker symbol? This morning, analysts at Hilliard Lyons issued an upgrade to buy for amusement park operator Cedar Fair. Priced at $26 and change today, Hilliard believes the stock's good for about a 13% gain as it rises to $30 a unit over the course of the next year. And why shouldn't it?

Cedar Fair only costs about 16 times earnings based on its trailing-12-months results, and its generous dividend yield of 6% makes up nearly half its value right there. Second-quarter earnings, due out at the end of July, are expected to rocket to more than four times what Cedar Fair earned last year -- $0.40 per share -- with long-term growth averaging at least 6% per year. All in all, the stock seems fairly priced, and if valued on its superior free cash flow, you can even argue Cedar Fair is underpriced.

Why play outside?
A second entertaining option comes from the analysts at Robert W. Baird, who argue that after losing 36% of its market cap since the year began (versus a 5% gain for the S&P), shares of mobile gamer Zynga are priced to move. (Hopefully up, for a change.)

While the company certainly faces some issues, Baird believes that Zynga's startling fall has now more than priced in the risks of "slowing growth in social games, lock-up expirations, and usage declines in key game franchises." As such, the stock's positioned to outperform the market from its current depressed price.

Sure, many investors will continue to avoid Zynga based on the company's supposed unprofitability. But here's the thing: While GAAP accounting rules require Zynga to report net losses on its business, in fact the company generated more than $140 million in cash profits over the past year. If you net out Zynga's cash on hand, therefore, and evaluate the company on its free cash flow, the result is an enterprise valued at roughly 24 times free cash flow -- not too high a premium for the 22% annual growth analysts expect Zynga to produce over the next five years. And for the premier company in mobile gaming, this is perhaps not too high a premium to prevent Zynga from outperforming the market.

Up, up, and away!
And last but not least in today's entertainment-themed ratings, what's more fun than space travel? Nothing, right? And so it is that this morning, analysts at Imperial Capital are urging investors to pile aboard shares of rocket-maker Orbital Sciences, and prepare for liftoff.

The success of rival spacefarer SpaceX in getting an unmanned supply capsule to rendezvous with the International Space Station this week and Dragon's return to Earth have captured investors' imaginations, and gotten them thinking about the potential for profits in private space exploration. But while SpaceX is currently still a privately owned company, Orbital isn't -- and it may be a company you should consider owning.

Priced at less than 10 times earnings, but expected by most analysts to grow these earnings at a respectable 15% annual clip over the next five years, Orbital shares could rocket in the months and years to come. Cash generation is a bit choppy at this one, as you might expect in a capital-intensive business like space travel. But from a plain vanilla PEG perspective, the shares certainly look cheap enough to buy.

Fool contributor Rich Smith holds no position in any company mentioned. Motley Fool newsletter services have recommended buying shares of Orbital Sciences.