Cramer's Battle Of Amusement Park Stocks: Cedar Fair Vs. Six Flags

CNBC's Jim Cramer has a growing portfolio of acronyms, with the latest being "AHY," or accidentally high yields.

The term is used to describe dividend paying stocks that are "somewhat down and out" and showing no signs of their dividends being in danger.

What Happened

Two "AHY" stocks that investors may want to take a look at are the amusement companies Cedar Fair, L.P. FUN and Six Flags Entertainment Corp SIX, Cramer said during his daily "Mad Money" show Monday.

Long-term investors have reaped an attractive return over the past decade in both names, although both stocks are down notably from their highs.

The Contenders

Six Flags is the largest theme park operator in the world, mostly in the U.S. but with some international exposure, including in Montreal, Canada.

The stock offers investors a 5.7% dividend yield.

Cedar Fair is smaller, with 11 amusement parks, three water parks and four hotels — all in the U.S. The stock offers a higher 7.1% dividend yield.

Cedar Fair's stock peaked in May 2017, and subsequent earnings misses were blamed on weather, Cramer said.

By comparison, Six Flags' stock was impacted by weather and in part by a narrative that new international projects in Saudi Arabia, Dubai and China may not proceed as planned, he said. 

The Verdict

Six Flags and Cedar Fair both reported earnings in the past month, and Cedar Fair clearly outperformed, the CNBC host said.

Six Flags delivered a small earnings miss; a modest revenue beat; a "stellar" 8% increase in attendance; and an international licensing deal showing a profit, he said. 

Cedar Fair, on the other hand, reported a "gigantic" 25-cent earnings beat, while a revenue beat was driven by more seasonal attendance pass sales, Cramer said.

Cedar Fair management highlighted optimism for Halloween- and winter-related events, which may imply that its past earnings misses can legitimately be attributed to weather, he said. 

The Final Word

Cedar Fair looks to be in a "better position" than Six Flags and comes with a cheaper stock at less than 15 times next year's earnings estimates versus Six Flags at 19 times, Cramer said.

Between the two, Cedar Fair's larger dividend yield accounts for less operating cash flow at 58% versus 68%.

The bottom line: Cedar Fair's stock is mispriced, cheaper on the basis of at least one metric and boasts a higher and safer dividend yield, the CNBC host said. 

Six Flags shares were up 0.38% at $57.43 at the time of publication Tuesday, while Cedar Fair shares were higher by 2.98% at $53.85. 

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