Cedar Fair (NYSE: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.
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.