Fun All Year Long

Are seasonal parks gradually becoming a thing of the past? When Six Flags (NYSE:PKS) posted an 11% uptick in revenues during its December quarter after reporting a 2% dip through the first nine months of the year, it looked likely, and yesterday's report from rival Cedar Fair (NYSE:FUN) all but confirmed it.

Cedar Fair saw its top line grow by 12% during the fourth quarter, while revenues grew by only half that much through the last year's first three reporting periods. Although Cedar Fair had some performance enhancers -- its Castaway Bay indoor water park resort opened in November, and the company acquired Geauga Lake this past spring -- the country's thrill parks are clearly succeeding in stretching their operating calendars further by emphasizing fall events like lavish haunted-house makeovers. Such moves make turnstiles click all through the once-barren month of October.

Yet the strong finish for Cedar Fair and its dozen gated attractions doesn't completely offset a disappointing year in which attendance fell by 3% at its parks (not including its recent Geauga Lake acquisition) while larger theme-park operators like Disney (NYSE:DIS) and General Electric's (NYSE:GE) Universal Orlando saw traffic grow nicely at their iconic destinations.

What's more, the company's 6% revenue growth in 2004 would have been just 2% without Geauga Lake. But wait a minute. Until this past season, Geauga Lake was Six Flags' Worlds of Adventure megapark that combined a traditional amusement park with the Sea World marine life park it purchased from Anheuser-Busch (NYSE:BUD). While it was easy to see how the clumsy hands at Six Flags would mess it up before selling it a few years later, Cedar Fair must have done pretty badly in its freshman run if a major multidimensional park accounted for only 4% of the company's revenue.

I'm not surprised that this happened. The deal was announced in March and closed in April, and the park had to open in May. That created confusion over admission policies, and while I can't hold Cedar Fair faultless in all this, I am certainly willing to see how well it recovers from that sandbagged season before laying more blame at its feet. I think 2005 will show heady improvements at the park -- and the entire company.

Cedar Fair seems to see it that way. It's investing $83 million in upgrading its properties while looking for revenues to come in between 6% and 8% higher. Cash flow is also expected to inch higher, and that will make yet another dividend hike likely. The company has increased its distribution 13 different times over the past 10 years, and the units currently yield 5.8%.

A fat yield isn't the only way to the heart of Mathew Emmert and the stellar performance of his Income Investor newsletter service, but it works for me. As a unit-holder, I've seen Cedar Fair at its best, and even though 2004 certainly wasn't it, with a strong 2005 likely and an ever-expanding operating calendar, I have no problem resting my hat on the turf of fried foods, spinning flats, and speeding coasters.

For more amusement:

• See what high-yielding companies Mathew is eyeing these days for Income Investor.
• Read up on how Six Flags held up this past quarter.
• Talk about your favorite thrill rides in our Rollercoaster Loving Fools discussion board.

Longtime Fool contributor Rick Munarriz isn't just an investor in Cedar Fair. He traveled to two of the company's amusement parks last year, when he trekked over to Knott's Berry Farm in California and Cedar Point in Ohio. He owns shares in Disney and units in Cedar Fair. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.