June 17, 1998
Stocks for Dad Part I
To Dad From Rick
by Rick Munarriz (TMF Edible)
Rank Group PLC
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Six Connaught Place.
London W2 2EZ, UK
http://www.rank.com
$11 3/8 as of June 15, 1998
Overheard at the 1998 Father's Day Bowlathon . . .
Edible: Hey Dad, great shot!
Papa: I could've been a pro.
Edible: Of course. [Into intercom] Deadwood Lane 24.
Papa: I could've been a terror on the PBA tour. Ladies and gentleman, the Fuming Cuban!
Edible: It's never too late to start. Of course, you might have to get your game average in the triple digits before those pesky qualification rounds start.
Papa: Who needs skills when you have charisma?
Edible: True. Well, you are probably wondering what I got you this year?
Papa: Well, seeing as you are weeks away from giving me my second grandson, I would say that baby Kevin will be plenty.
Edible: If you say so. [Bowls a 7-10 split] Hey, eight pins down. Woohoo!
Papa: Of course, that doesn't mean you have to return anything you may have already gotten me.
Edible: No, you're right, pops. I mean, with Nicholas and now Kevin you have Munarriz monarchy bookends. I think I'll just take back this stock certificate here.
Papa: Fine. The market is gonna tank tomorrow anyway.
Edible: You've said that for how many years now? Anyway, like it or not, this year I got a little Anglophile on you. Here you go, Rank Group PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RANKY)") else Response.Write("(Nasdaq: RANKY)") end if %>.
Papa: Overseas diversification? [Into Intercom] Ball Return, Lane 24.
Edible: Well I know how jaded you are about the domestic market nowadays. Rank is a major leisure industry player in Europe, with everything from resorts to pubs to bingo parlors to movie theaters. Last year the company had more than $3.3 billion in revenues! But, while Rank is a British company, I think you will recognize their Transatlantic endeavors. They own Hard Rock Cafe, and they also own half of the Universal Studios Florida theme park resort.
Papa: Isn't Hard Rock Cafe one of those fly-by-night eatertainment restaurants?
Edible: Twenty-seven years strong. That must have been one long night. Besides, the company is now banking on that brand name with everything from casinos to VH-1 programming.
Papa: I see, but what's so exciting about Universal Studios Florida?
Edible: Well Dad, we are less than a year away and a short drive away from what is going to be the most incredible theme park ever built: Islands of Adventure. It's going to be amazing. Along with that, Rank and Seagram <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VO)") else Response.Write("(NYSE: VO)") end if %>, the two joint partners, are going to build hotels and at least two more theme parks.
Papa: Disney 101.
Edible: Yes, yes. [Bowls his second shot into the gap between the two standing pins]
Papa: It's good! [With field goal referee gesture]
Edible: It's good and it's going to get better. Disney has always had to sanitize its attractions. Universal is now taking the theming magic from Disney and merging it with the thrill rides of traditional parks. Universal Studios Escape is going to become a major destination over the years. In the meantime, Rank also owns a 10% stake in the new Universal Studios theme park being built in Japan. While Rank is a great play on the improving European economy, it is a becoming a global purveyor of fun. You still like fun, right Dad?
Papa: But what if the economy tanks -- here and abroad?
Edible: Rank is a major player in videotape and theatrical film duplication. A lot of the videos you buy, like that Star Wars trilogy set Nicky loves so much, were manufactured by Rank. Rank was also the company behind the Titanic blockbuster. We will always be looking for leisure, and be it travel or in the more simple comforts like going to the movies or buying a video, Rank will be there.
Papa: Yes, and what's this? A stock price that is not making new highs and, hey, a generous dividend?
Edible: Well, earnings and revenue have been pretty flat for the company lately -- operating profits were up just 10% last year. But the company is more focused now. Last year it sold its stake in Xerox for $1.5 billion! A lot of that money went to buy back shares. So, this is a leaner company now and I think you will agree that with Islands of Adventure opening up next year, a new era of corporate growth may be looming.
Papa: [Bowls a strike] Yes! They don't own any bowling alleys do they? Because I'm good.
Edible: They sure don't Dad.
Papa: Excellent, I'm the master of a dying sport anyway.
Edible: I love you, Dad.
Papa: I love you too, son.
Edible: Happy Father's Day! [Into Intercom] Ball return Lane 24.
* A Stock for dad represents the opinion of one Fool and in no way should be taken as the opinion of either the Motley Fool, Inc., the company in question or representative of anyone or anything else other than that specific Fool's thoughts.