Six Flags

Oh la la. The betting odds swung this way then that, the spit flew and the back prickled. Election day had it all. Whilst results are not yet known, what is known is that the election is now over. A few postal votes need to be added up, a few swing states need to nail their colours to the mast, but it looks like Biden is almost in. Trump potentially out. That he may need to be dragged out is a scene still to play out, but the headline deal appears just about done. After such a seismic event, what now? Back to Covid, back to the shutdowns and the trajectory of economic growth into 2021. Soon, perhaps very soon, there will be read outs of phase III data. Given the number of trials in late stage development and the sheer scale of human ingenuity behind them, chances are good that one, if not more than one, will come through with a rubber stamp: APPROVED. Then the market can turn to thinking about a normalised economy, and which stocks are set to ride the wave. One stock that will benefit is Six Flags Entertainment, the amusement park operator. Covid hit at a bad time as a new management team had recently settled in and were early into a re-tooling and investment phase. If your business is in large-scale amusement parks and state-mandated shutdowns are then announced, it’s not good. No PR could spin it as a positive. What a PR could do now though as investors look up, not down, is talk through the revamped business model, the new pricing strategy, augmented CRM and the more focused capex allocation. Technology now sits embedded in the business, allowing management to grind efficiencies, cut costs, and power long-term earnings. Customers will return. It’s the thrill. The excitement. The adrenalin. For families, it is a big day out riding the rollercoasters, buying over-sized buckets of candyfloss and driving home late, long-after bedtime. It’s how memories are made. After a year like 2020, there is likely massive pent up demand for treats, for days out. Large scale amusement parks, alongside the Indy500, dog mushing and the rodeo, are right in the zone. Analysts have conservatively modelled attendance levels through to 2022, but when there is vaccine, and confidence returns, so might the queues. And when they get in, customers are unlikely going to hold back. For investors that will mean a turn up in earnings and, given what the management were saying on a recent update, that turn could be significant.