Investing in Summer FUN-damentals: Nike, Urban Outfitters, Schering-Plough, Cedar Fair

The first day of summer arrives on June 20, 2008 this year. One way to put some fun into your summer is to invest in fundamentally sound companies that earn profits while you work on a tan.

Therefore, I decided to take a look at a few stocks that are already fundamentally sound investments and stand to receive an extra boost from the summer months.

I used the Research Wizard to search for companies that have seen earnings forecasts rise as well as share price and net income growth in addition to other strong points.

Looking Good in the Sun

Apparel retailers, which are often played on a seasonal basis, are standing strong this summer.

One well-known retail player that is beckoning people to come out and play in the sun is Nike, Inc. (NKE). Currently trading close to a 52-week high, this Zacks Rank #2 (Buy) company put up a healthy 29% return over the past year, and prospects for future growth look good.

Wall Street earnings estimates for the year ending May 2008 have been steadily rising from the three months-ago level of $3.44 per share to $3.53. The following year’s forecasts are also on the rise.

Nike’s earnings per share increased by 19% over the past five years and are expected to grow by about 14% over the next three to five years. On a year-over-year basis, the company’s net income was up 7%.

Another place one may get outfitted for the summer would be Urban Outfitters, Inc. (URBN). The company is an innovative specialty retailer and wholesaler which offers a variety of lifestyle merchandise to highly defined customer niches through Urban Outfitters stores in the United States, Canada, and Europe, two Urban Outfitters web sites and an Urban catalog.

This is another Zacks Rank #2 (Buy) pick that boasts strong fundamentals, which should be buoyed by the summer season. Urban Outfitters delivered a return of 33% over the past year and is also currently near a 52-week high.

This retailer has seen 18 out of 20 covering analysts boost their earnings expectations for the year ending January 2009. Current forecasts of $1.23 per share are above last month’s $1.19.

The company’s annual net income jumped 38% from the year-prior, and it has delivered earnings per share growth of 31% over the past five years. URBN’s earnings per share are projected to grow by about 24% over the next 3 – 5 years.

Another One to Consider

Sunscreen will be slathered on by sun worshipers everywhere. A solid company whose wide range of offerings include sun care products is Schering-Plough (SGP). The company makes and licenses science-based medicines and offers services that help people worldwide live longer, healthier lives.

This healthcare player posted first-quarter earnings per share of 53 cents, topping the previous year’s 42 cents and soaring past the consensus estimate by 47%.

The company’s earnings per share are expected to grow by approximately 14% over the next three to five years. Its return on equity [ROE] of 29% is well above the industry average.

Current full-year 2008 analyst estimates are at $1.52, versus the two months-ago level of $1.42.

A FUN One to Watch

Cedar Fair LP (FUN), with its outdoor water parks, may surge higher this summer. It is a publicly traded partnership headquartered in Sandusky, Ohio, and one of the largest regional amusement-resort operators in the world. The Partnership owns and operates 11 amusement parks, six outdoor water parks, one indoor water park and five hotels.

The company’s fundamentals are not quite as strong as that of the aforementioned. It reported a first-quarter loss of 81 cents per share. However, the loss was narrower than the year-ago loss of $1.02, and the earnings result came in 26% above the consensus estimate.

Given FUN’s fundamentals, the company seems poised for a turnaround this summer. Full-year 2008 earnings estimates $1.11 are up from the two months-ago level of $1.06. Year 2009 projections have also been on the rise.