Six Flags & Cedar Fair, Generac, Paycom: Top Stocks

Six Flags Entertainment (SIX) is reportedly in talks with Ohio theme park operator Cedar Fair (FUN) for a potential merger. Generac (GNRC) shares pop on positive third-quarter earnings results. Lastly, Paycom Software (PAYC) stock suffers on Wednesday, falling 38% after reporting weak fourth-quarter revenue guidance.

Yahoo Finance Live takes a look at several trending tickers ahead of Wednesday's closing bell.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

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JULIE HYMAN: Let's check out some trending tickers right now. We got to start with shares of Six Flags and Cedar Fair. And that's on a report from the Wall Street Journal that the two companies are considering a deal here. Presumably, it would be Six Flags buying Cedar Fair, but unclear exactly what this would look like. They characterize it, The Journal, that is, as a merger, potentially.

Six Flags, of course, owns Six Flags. Cedar Fair owns a number of different parks across the country, including Cedar Point, which I believe is in Ohio, Dorney Park in Pennsylvania, Kings Dominion. I grew up going down to Kings Dominion in Virginia. Knott's Berry Farm, so it has a significant portfolio as well.

JOSH LIPTON: Yeah, and I've been reading these, just a little bit up on Six Flags and kind of the change in strategy that they've had. They're sort of targeting higher end guests now, like raised prices, made over their parks. And the CEO has said it's having an impact in terms of growth and attendance. Companies are roughly the same size. Market value is around $2 billion. Cedar Fair, by the way, is scheduled to report earnings tomorrow morning, I think. So maybe we can get some news there on that headline.

JULIE HYMAN: Yeah, we might, Josh. I mean, both of these stocks, though, have been down this year. That's something to point out here, even as, you know, we talk about maybe these companies coming to some sort of a deal. Six Flags has also been the subject of an activist campaign from land and buildings, and Jonathan Litt, who succeeded in getting a representative on the board earlier this year. So we'll see what ends up happening in this situation.

We're also watching shares of Generac, the generator maker. Of course, that stock is trading higher after it reported third quarter results after revenue and adjusted earnings per share came in higher than estimates. The CEO attributing the positive results to improving operating performance. This company has had really uneven results coming out of the pandemic.

Everybody in the pandemic-- not everybody, but a lot of people bought generators, right? And then the pandemic ended, and this has been one of those companies that's been a victim of lumpy demand and the normalization cycle. So this time, things looking a little bit better after it had some weakness in recent quarters.

JOSH LIPTON: Yeah, I mean, that's a very strong pop. Look at that. You're up about 14%. It looks like they beat. Their adjusted EPS and net sales beat estimates. And analysts were specifically talking about, I guess, about strength in commercial and industrial product segments, is what they're keying in on there.

JULIE HYMAN: Right, so it's not the homeowners this time who are buying their generators, but rather, businesses.

JOSH LIPTON: Different areas of strength there. All right, finally, last ticker here, shares of Paycom, they are plummeting here. Look at this. Wow, down nearly 40%. It's after the company cut its revenue forecast for the fourth quarter. Third quarter revenue also missing expectations. So this one, I mean, this is a mayday, this one. This is-- by the way, this was the biggest intraday fall on record, by the way. This is an employment software company. So I think the thing is, cut its full year forecast.

Also, the Q3 revenue missed, at least what the Street was looking for. And analysts are really busy here, downgrading their recommendations. Stifel, Brad Reback, of course, well-known guy, he goes to hold, price target goes to 160. Expects the first half of '24 to be challenging. He does think the forecast is conservative. He says a lot of the bad news, he argues, is priced in, but he did slash the rating there to a hold.

JULIE HYMAN: You know, one other analyst over at Opco said a rebound in the hiring market is unlikely to occur anytime soon. And I think Paycom is really important here because it's not just about Paycom, right? It's about the whole payroll software space, and then by extension, the job market, right? We have been looking-- we've got the jobs report on Friday.

We had a JOLTS report today that showed more openings, although there are some questions over the accuracy of that, but more openings than expected in the job market. So when are we going to start to see softening in the job market? The Fed is watching it, obviously, very closely. And, you know, is this one of the leading indicators? Maybe. I don't know. But it's definitely something that, you know, not only people who are investing in this sector are probably macro folks are also watching--

JOSH LIPTON: Absolutely

JULIE HYMAN: --trying to read the tea leaves here, as we await that jobs report on Friday.