The Best Roller Coaster Ride in the Markethttp://www.fool.com/investing/general/2013/10/26/the-best-roller-coaster-ride-in-the-market.aspx Dan Moskowitz
October 26, 2013
You're frustrated. You have nothing to do but make small talk and people-watch. As you approach the gate, your heart rate increases. When you enter the roller coaster, you forget about all your worries and focus on nothing but the upcoming steel peak, which will be followed by a 100-foot drop, and then an even higher peak.
That's living, and it's a fun way to spend a summer afternoon. However, this isn't the type of ride savvy investors want to take. If you choose this route to investing, then you're odds of vomiting will be higher than they would be on an actual roller coaster. Therefore, it's imperative that you choose a steady ride. It might not be as exciting, but it will last longer, and it will allow you to enjoy all the scenery that life has to offer. First, let's take a look at that exciting ride.
The largest regional theme park in the world
Okay, so the odds of you remembering that article are close to 0%, but let's pretend I'm that popular for a moment. In that article, I wrote the following about Six Flags after a tragic incident leading to a woman's death:
"Some may say it was just one accident out of millions of park visitors, but it's still one too many. It should have an impact on the industry and especially Six Flags. Many people who considered visiting an amusement park will now stay away."
This prediction was easy to make, because it was based on logic -- the real key to investing. Not surprisingly, attendance at Six Flags declined due to that incident. However, Six Flags still saw its third-quarter revenue improve 3% year over year. It cited innovative attractions, high guest satisfaction ratings, higher per-capita spending, and upsells. Let's head up the track of optimism for a moment.
Future innovative traffic drivers
Other innovative offerings planned for 2014:
Six Flags and Cedar Fair both offer very generous dividend payments of 5.20% and 5.70%, respectively. However, that usually comes at a price, which is the case here. For instance, Six Flags has a debt-to-equity ratio of 1.62, and Cedar Fair has a debt-to-equity ratio of 41.15. Investing in highly leveraged companies can be extremely profitable in bull markets. However, when that roller coaster reaches its peak and the market heads south at a hasty speed, interest rates increase with a fury and investors flee to safety. This leaves investors who own highly leveraged companies in a wasteland of regret. Avoiding such a scenario is possible, and