Cedar Fair (FUN) could be the most attractive stock for investors looking to bet on a rebound in the battered theme park industry niche. Goldman Sachs analyst Stephen Grambling started coverage on the sector by singling out the regional park specialist with a buy rating and a $43 price target, equating to a 30% return from current levels.
Cedar Fair, like its peers Six Flags and SeaWorld, has seen its stock price plummet through the social distancing efforts that started in mid-March. That slump could set the stage for a sharp rebound if conditions improve in time for the peak summer attendance season.
Conversely, there's a good chance that these stocks will fall further if demand doesn't return, or if an outbreak occurs at any one of their parks following reopening.
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Cedar Fair does boast some valuable assets, including a robust season pass program that's still attracting strong demand. Yet it's likely that the industry will take a year or longer to recover lost ground -- especially as the COVID-19 threat remains.
That's why investors who aren't seeking high-risk situations might want to keep this stock on their watch list, rather than purchasing shares, until they see evidence of a sustained operating rebound.
