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LORDZ predicts ???????????????????????????????????????????????????????????????????????
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A good summer for SIX................................................................................................................................................
These parks are great and are entrenched with moats that no really new parks such as those managed by Disney ~ Six flags ~ and Fun ~ Cedar Fair will be built anytime soon if ever...
SIx has gone thru bankruptcy and has done rather well..................................................
Expect a larger yield than treasuries and what the bank gives.................... LMAO/......................
WHy not give SIx a try................................................
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improved economy
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Six Flags would have to increase their yearly EPS three-fold to justify the current trading price of $45 per share. Yes, I know that they just increased their dividend to .60 per quarter giving a yield of 5%. Yes, there are rumors that Six Flags may not have to pay taxes for the next decade/
However, even with this dividend (which I question whether they can even afford to pay) and the tax break, the stock is still far over-valued in my opinion. Unless there is some major - I mean major - increase in profits on short oder the price has to fall from here.
I'm thinking the day after a 4.5% price jump, due to a rosey outlook in the earning call, is a good spot to start my short position (thumbs down).
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dividend, wave from WOLF bidding war
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I've been stalking this stock for a couple of weeks now waiting for a pullback, but I'm going to have to pile in with the green thumb now on the announcement of the dividend increase late yesterday.
This stock looks like it has a lot of potential following the company's exit from bankruptcy in 2010 and all the debt relief they got as a result of that.
TMFDeej has a pretty helpful discussion about the company in his pitch which I'd recommend to others to read.
The Company refinanced their debt in December with a new credit facility and term loan financing and it looks like that new financing package probably relaxed some of their restricted payment covenants on dividends and share buybacks. I have yet to verify that, but that is my impression so far. They announced a $250 million share buy back plan a few weeks ago and now increased their quarterly dividend from 6 cents a share to 60 cents a share, that's a TENFOLD increase!! The current yield stands at about 5% as of this writing.
I'm not ready yet to put up real money into this name, but I'm planning on digging into my research in a big way soon, maybe even tonight or tomorrow.
Based on my cursory first pass at researching this company I can see the potential for the stock to get to $80 or so in about 4 to 5 years time. That was before they cranked up the dividend, though. Now I'm thinking higher yield and compounding potential from reinvested dividends and probably lower terminal value.
This could be a good opportunity, but there are a few things I need to dig into in greater detail. TMFDeej's assertion regarding their long term tax shield is high on my list of diligence items. If that's correct, its a big boost to their cashflow. I'm also very interested in gaining a better understanding of their new financing package and what new flexibility it may have given them.
Management does seem to be making a commitment to treating the shareholders well which is something I always like to see.
I see a lot of potential here, but will remain cautiously optimistic until I complete my analysis.
Recs
This amusement park may be no Disney World or Universal Studios, but it has consistently been a market player for more than 40 decades. The company garbles up smaller parks and incorporates them into its franchise. Summer is coming soon and the amusement park season starts with a lot of new rides and attractions and parents itching to unload their kids for a few hours.
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Barron's Roundtable 2011 Meryl Witmer's pick
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