Is Cedar Fair LP Still FUN?

Cedar Fair LP FUN has been market darling moving over 50% in 1 year and almost 800% in 5 years. Is this type of growth rate sustainable?  

Today's installment from the series, 'Trading Lessons From A Hedge Fund Trader' will focus on Cedar Fair LP FUN as per our reader's request for research, available here at BehindWallStreet.com. 

Fundamentals

Let's take a look at the valuations to see if FUN is fundamentally a company you want to own. Pardon the cheese, I couldn't resist the word play.

Cedar Fair LP FUN has a P/E of 35.33 while the industry has a P/E of 24.03.

FUN has a Price to Book of 61.84 while the industry has a Price to Book of 2.95. 
As an investor, you want to see companies with a low price to book ratio relative to its peers. But Cedar Fair LP FUN is clearly a high flyer so it will sport a high ratio relative to its competition.

But wait, if FUN still a high flyer? It has only move $1 higher since its May 2013 highs. Don't let the 800% move from 2009 fool you. 

                                                                                       

                                                                   

FUN is well, no longer fun anymore. At least that's what the latest price history tells me.
Once again the opportunity at word play presented itself and I took it. That's what traders do.

The Dividend Yield on Cedar Fair LP FUN is 5.74% while the industry has a Dividend Yield of 1.05.

Now you are seeing why Cedar Fair LP FUN has been a stock on the move. Stocks (most) that offered high yields in a low interest rate environment were viewed as more attractive to the markets and their lofty stock prices reflect that optimism.

Technical Situation
Cedar Fair LP FUN is clearly losing its momentum over that past year. FUN has moved 50% from Nov 2012 to May 2013 and has only moved approximately 3% higher since May 2013.

The trading range has shrunk from $38 to $44 or 15% volatility over the 5 month period. 
We don't like shrinkage. 
Ask any guy and they will agree with me. George Costanza will back me up on that one for sure.

The trading behavior is clearly changing. Does this look like a distribution zone to anyone? This type of consolidation zone offers the trader and investor an opportunity to make a low risk high reward play.

The main reason why Cedar Fair LP FUN is a trade candidate is that the trading behavior from October 16, 2013 tells me something is up, or rather down with the stock. 

I'm on a roll today, Shakespeare and Moses better watch out.

                                                                                                                 

                                                                               

It took 1 hour for Cedar Fair LP FUN to move almost 2% from $43.45 to $44.20 and back down to $43.55. 

It took 5 months for Cedar Fair LP FUN to move 3% higher and we are talking about a stock that moved almost 800% since 2009.

So what is a trader or investor suppose to do with Cedar Fair LP FUN?

Wait for the next big move!
That ! is for Elaine Benes!

If you aren't sure how you should structure a game plan for Cedar Fair LP FUN, we have one for you, check out our Flagship and ETF Newsletter.

This is a cursory look at Cedar Fair LP FUN and we are not making any specific buy or sell recommendation but merely voicing our opinion of the current situation. Each individual investor must conduct their own due diligence of both the company, the market sector as well as their own financial situation and risk parameters.

By Joel Laceda - October 17, 2013 BehindWallStreet.com