Summer Stock to Avoid #2: SeaWorld
SeaWorld (NYSE: SEAS) has always drawn criticism for its treatment of animals that critics argue should not be kept in captivity. The scrutiny has intensified over the last year as the company defends itself against allegations that it did not do enough to prevent the deaths of trainers working with its famed killer whales.
A documentary about SeaWorld’s treatment of both animals and employees was released in January 2013 and seems to have greatly influenced how the general public views SeaWorld’s family of amusement parks.
Though the stock is up 5% so far this year, its historical performance is not good.
Down almost 15% in the past year and almost 10% since its 2013 IPO, the stock has not done well. The first quarter of 2014 was the company’s worst since its IPO. The company blamed weather and Easter falling later in the calendar but I’m not convinced.
SeaWorld faces a major image problem, one that I don’t think the company can recover from without significant change to its parks and business model. What’s even worse is that it seems the company is digging in on its denials of issues related to the killer whales in its parks.
Weak performance combined with a major image problem that management shows no desire to change is a very bad combination.
Summer Stock to Avoid #3: Six Flags Entertainment
Roller coasters, water slides and greasy amusement park foods are an essential part of summer for many Americans. And Six Flags Entertainment (NYSE: SIX) is a vital part of the amusement park landscape.
But not all amusement park companies are created equal. I wrote about Cedar Fair (NYSE: FUN) in yesterday’s article recommending three summer stocks to buy. Its rival, Six Flags, is one of my top three summer stocks to avoid.