Disney's Brilliant Hike

At least one radio station in every market is playing holiday music around the clock, which is fantastic because we never tire of The Chipmunks Christmas song. We had to tow a golf cart behind our car on our most recent trip to the mall because we couldn't find a parking spot within walking distance. And just as he does every year around this time, Bill Mann smells like eggnog.

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In today's Motley Fool Take:

Disney's Brilliant Hike
Discussion Board of the Day: RFID
CarMax Hits the Skids
Quote of Note
Kimberly-Clark's Cash Plans
Got RFID?
More on Fool.com Today

Rick Aristotle Munarriz (TMF Edible)

Its annual dividend wasn't the only thing that Disney(NYSE: DIS) was raising last week. Come January, a one-day ticket to its Disney World theme parks in Florida will set you back a stunning $59.75.

That's a daring $5 hike, especially when you consider that some of its parks wouldn't exactly qualify as full-day experiences. Animal Kingdom has now had six years to establish itself as more than just a half-day park, yet it still closes at 5 p.m. every day. EPCOT is a more popular gated attraction, yet it still closes many of its rides shortly after dusk and won't open its country exhibits until just before lunchtime.

According to Amusement Business, just one of Disney's four Floridian parks grew its attendance last year and, with the peninsular state drawing a few tourist-chasing hurricanes in 2004, it's not as if the results are likely to have improved much this year.

Yet calling this a brilliant hike wasn't meant to be drippy with sarcasm. The move is a good one because at the same time Disney is rolling out customized ticket options that will make extended stays substantially cheaper.

That's what Disney has wanted all along. Sure, it wouldn't mind you as a day guest, but it would much rather have you as a captive customer for a week or so. Staying at one of its many onsite resorts, dining at its many restaurants, taking in the various water parks, shopping districts and golf courses -- that's where Disney would rather see you.

All around the country even the smaller regional chains are starting to flesh out their thrill havens as resorts to profit from extended stays. Last week, Cedar Fair(NYSE: FUN) announced that it was building overnight accommodations at its Worlds of Fun park in Kansas City, following in the footsteps of its more fleshed out destinations elsewhere.

While the industry has always been defined in terms of attendance and per capita spending, amusement parks are now starting to cash in on its patrons on the other side of the turnstile.

For Disney, longer stays also mean providing its guests the flexibility to explore its massive entertainment compound. So if your animal-averse teen isn't wowed by Animal Kingdom, perhaps the next generation DisneyQuest video arcade will do the trick. The childless couple who feel they've outgrown Magic Kingdom's Fantasyland may find a more nocturnally tantalizing experience at the company's Pleasure Island collection of nightclubs or the fine dining alternatives at the upscale resorts.

Living in Florida, it just doesn't feel right if I'm not heading out to Disney World every other month or so. Yet as many visits as I may have logged in my life I tend to discover something new every single time. That's why I always wonder if the tired family dragging itself to the parking lot at the end of the day knows that same Disney World that I do. The parks aren't cheap and favorable first impressions are difficult when everyone comes in with different expectations. That's why I'm pretty upbeat about Disney's new pricing strategy. The company has some promising new attractions in store for 2005, and marketing itself as a value for extended stays over a pricey one-day deal is the best way to make sure that most of its guests walk away with smiles on their faces -- and not cheated by kicking into Disney's coffers along the way.

Longtime Fool contributor Rick Munarriz has been to all six of Disney's domestic theme parks this year, and even though he has owned shares of Disney since the 1980s, he has never counted on the dividend as a get-rich-quick scheme. He also owns units in Cedar Fair. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks a day early.

Discussion Board of the Day: RFID

Excited about the possibilities of being able to track things through radio frequency technology? Still not sure what RFID is all about and why you should care? All this and more -- in the RFID discussion board. Only on Fool.com.

CarMax Hits the Skids

Seth Jayson (TMF Bent)

Peering into the crystal ball is never an easy proposition, not even when you own the ball. Take the case of CarMax(NYSE: KMX). When my Foolish colleague Rich Smith wrote his last roundup, he was marveling at the way the firm had bounced back from a prediction of negative comps. On word of the same sales upgrade, the stock began a 50% run in the space of a couple months.

Then came today's sales announcement, which brings us back to where we were, namely at the bottom end of the guidance range. Overall, revenues were up 13% for the quarter, to $1.22 billion. Unfortunately, the 2% comps growth didn't do much to cheer investors on an otherwise red day for Wall Street. Earnings were predicted to come in at $0.16 per share -- excluding a one-time adjustment -- below what analysts were predicting.

While this still looks like a strong company, prospective investors need to take heed. It remains to be seen whether the car-sales woes at GM(NYSE: GM) and Ford(NYSE: F) can translate into sustainable sales growth for CarMax. The action at DaimlerChrysler(NYSE: DCX) and some of the Japanese automakers suggests that Americans are still willing to buy new but that predicting what they want isn't so easy.

In an era of easy credit, is it smart to bet on the used market? While it's fine to see CarMax put up low-teen sales gains, it's tough to do that forever when you have to fund it through new locations. In his peek at CarMax and its competition, Rich pointed out that neither it nor competitors such as America's Car-Mart(Nasdaq: CRMT) or Auto Nation(NYSE: AN) are priced for those who like free cash flow.

On the other hand, a sterling brand and 16% broader selling base may jump-start future revenues, should rising interest rates ever strike the new car market with any real force.

For related Foolishness:

You can never tell whether CarMax will gun it or stall out.
See why it's no holiday season for the automakers.
Meanwhile, the competition's getting faster.
Get advice on buying and maintaining a car from helpful Fools. (Free trial required.)

Seth Jayson is hoping to find a tricked-out minivan at CarMax one of these days. At the time of publication, he had positions in no company mentioned. View his stock holdings and Fool profile here. Fool rules are here.

Quote of Note

"Speech is conveniently located midway between thought and action, where it often substitutes for both." -- John Andrew Holmes

Kimberly-Clark's Cash Plans

Nathan Slaughter

Consumer products giant Kimberly-Clark(NYSE: KMB) has been generating some fairly impressive -- in fact, record high -- cash flows recently, a trend that was noted at the year's midway point and later trumpeted after the company's third-quarter results were released. Over the past 12 months, free cash flows have topped the $2 billion mark, about double the $1.1 billion that was churned out last year. This morning, the company unveiled what it plans to do with all that cash.

Kimberly-Clark will not boost its dividend payment, or repurchase shares, or plough more money into research and development -- it plans to do all those things. First, quarterly dividends will be raised by a nickel, or 12.5%, to $0.45 -- which will lift the yield to about 2.8%. The company's annual dividend has grown by two-thirds since 2000, with an increase in each of the past five years.

Furthermore, management intends to buy back at least $1 billion of its stock in the coming year. This new program follows $1.6 billion that is expected to be spent on repurchases this year, and $537 million from the year before. Going forward, the company intends to buyback 2%-3% of its outstanding shares annually.

But today's good news didn't stop there for shareholders. Kimberly-Clark also outlined plans to slash costs by $400-$500 million within the next three years and grow returns on invested capital (ROIC) by 40 to 50 basis points annually. The company also announced the launch of new products (such as antiviral Kleenex and Huggies Bath & Body products) as well as plans to expand operations in a number of fast-growing, emerging markets, such as Russia, China, and India.

After spinning off its Neenah paper and Canadian pulp division recently, Kimberly-Clark is now focused on its core health & hygiene business, which is battling rising raw materials costs and fierce competition from Procter & Gamble(NYSE: PG). The company is expecting to spend up to an additional $100 million for pulp next year and has had limited success at passing along these price increases to consumers. In fact, the bulk of next year's anticipated 3%-5% sales growth will come from an increase in volume rather than prices.

Despite a strong upward move in the past few weeks, Kimberly-Clark still trades at only around 17 times next year's projected earnings of $3.70-$3.85 (a range that management recently reaffirmed). While that's not exactly cheap given the company's single-digit growth rates, it still represents a discount to rivals like Procter & Gamble and Playtex(NYSE: PYX). This morning's plans are a sure sign that Kimberly-Clark is brimming with self-confidence, which along with a growing pile of cash can only reassure investors.

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Fool contributor Nathan Slaughter owns none of the companies mentioned.

Got RFID?

Rick Aristotle Munarriz (TMF Edible)

So close, yet so far in investor understanding, radio frequency identification -- or RFID -- is just weeks away from invading our lexicon. That's because come January, the Department of Defense and Wal-Mart(NYSE: WMT) will be demanding that their contractors and biggest suppliers, respectively, tag their shipments with RFID chips.

What is RFID is almost as important as clarifying what it is not. It is a great technology that is going to improve corporate operations. But contrary to what you may have heard, it isn't going to make the bar code obsolete. Not yet anyway.

Over the weekend, I spoke with Kevin Ashton, co-founder of the Auto-ID Center at MIT and now vice president of marketing at RFID specialist ThingMagic. Ashton is a pioneer in this exciting field, which is going to send ripples through most industries. His company teamed up with Intel(Nasdaq: INTC) last year to create a next generation tag reader, and companies like Tyco(NYSE: TYC) -- through its Sensormatic subsidiary -- are selling RFID readers based on ThingMagic's designs.

The full transcript of Ashton's illuminating interview will be made available to Rule Breakers subscribers later this week. In it, he provides a frank assessment of the public companies that he favors in this promising sector, such as Zebra Technologies(Nasdaq: ZBRA), Hewlett-Packard(NYSE: HPQ), and UNOVA's(NYSE: UNA) Intermec, as well as those that he sees having an uphill climb, like pet and human RFID tag specialist Applied Digital(Nasdaq: ADSX).

In a nutshell, RFID will make supply chain management more efficient by enhancing inventory control. While there are also some lucrative security and point-of-sale aspects to the technology, those applications will have to wait until the passive RFID tags become cheap enough to stick on something as basic as a pack of chewing gum.

Yet having radio frequency readers communicate with otherwise dormant merchandise offers some compelling possibilities that would even make the Jetsons envious. Yes, that's still far away from becoming a reality, but it's not as far as you may think.

On Thursday, I'll be back with a closer look at the many publicly traded companies looking to play major parts in your RFID future. And if you want to check out Ashton's interview later this week, but you're not a Rule Breakers subscriber, don't worry, there is still time to sign up for a free trial.

Longtime Fool contributor Rick Munarriz isn't sure he would want an RFID chip implanted in him, but he wouldn't mind never losing another sock again if his garments could be tagged. He does not own shares in any of the companies mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks today.

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For a list of all our stories from today, see our Today's Headlines page.

Disney's Brilliant Hike