Regional amusement park operators aren't typically fodder for investors eyeing growth stocks.
Even at the national level, when Disney
However, Six Flags and Cedar Fair have shown signs of life during the typically lamentable holiday season. Six Flags reported yesterday that adjusted revenue during the quarter spiked 18% to $121.8 million. This would normally seem like a fluke, but Cedar Fair's top line also climbed a hearty 23% during the same three months. Attendance at Six Flags and Cedar Fair jumped 19% and 20%, respectively.
What's going on here? Most of the country's amusement parks aren't open year-round. They may open during weekends in October for Halloween-related haunts, and in late December for Christmas festivities, but these gated attractions live and die by the summer season when kids are out of school.
The spike in attendance indicates that there's a demand for ride-based entertainment. More importantly, the ability is there to pay for it.
Indoor waterpark operator Great Wolf Resorts
We didn't see this kind of growth during the telltale summer season in 2010, though most operators inched forward. Will it carry over into 2011's pivotal summer?
We may have to check our optimism at the door. Cedar Fair only sees revenue and adjusted EBITDA growing at a 2% to 3% annualized clip over the next three to five years. Tensions in the Middle East have sent oil prices higher, a troublesome trend to keep an eye on as we get closer to the summer road trip season.
I'm more bullish.
I already saw signs of life in 2010. Indiana's Holiday World came through with a 14% uptick in attendance. Universal Orlando -- jointly owned by Blackstone
These may have been isolated cases in 2010. Holiday World has defiantly bucked the recessionary malaise for years. Universal Orlando got a boost from its magnetic Harry Potter attraction. I think the 2010 exceptions will be the rule in 2011.
Six Flags is already in better shape than it was a year ago. As a result of its Chapter 11 filing, Six Flags has whittled its net debt down from $2.2 billion to less than $0.8 billion over the past year. The chains that have prudently shaved their operating costs during the downturn will be back with thicker than expected margins as long as the cuts don't come at the expense of the guest experience.
It's going to be a good year for the industry. Seeing Six Flags shares nearly double off their summertime lows tell me that I'm not the only one feeling that way.
Would you buy into the amusement park industry ahead of the 2011 season? Share your thoughts in the comment box below.
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Longtime Fool contributor Rick Munarriz loves hitting amusement parks with his family over the summer. He does own shares in Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.