Great Wolf Resorts, Inc. (WOLF)

My family recently returned from a trip to Niagara Falls. While up there, we heard of a terrific family themed indoor warterpark resort. While we didn’t stay there, we did make a visit and now are planning to make a trip back to stay there. After returning home, we discovered a lot of people who has stayed and are planning on returning. So naturally, I thought this could be a good investment opportunity.

Great Wolf Resorts believes that recent vacation trends favor drive-to family entertainment resorts featuring indoor waterparks, as the number of families choosing to take shorter, more frequent vacations they can drive to has increased in recent years. And based on the price of gas, it looks like these trends will continue. Great Wolf is positioned to be less-affected by changes in economic cycles, as drive-to destinations are generally less expensive and more convenient than destinations that require air travel.

Their primary internal growth strategies are to: maximize total resort revenue; minimize costs by leveraging their economies of scale; and build upon their existing brand awareness and loyalty in order to compete more effectively.
Their primary external growth strategies are to: capitalize on their first-mover advantage by being the first to develop and operate family entertainment resorts featuring indoor waterparks in selected target markets; focus on development and strategic growth opportunities by seeking to develop additional resorts and target selected licensing and joint venture opportunities; and continue to innovate by leveraging their in-house expertise, in conjunction with the knowledge and experience of selected third-party suppliers and designers.
These external growth strategies are based primarily on developing additional indoor waterpark resorts either alone or in conjunction with joint venture partners, or by licensing.

And their strategy appears to be working. Over the last three years revenue has grown by 136%. Last year they were up 28.8 % and they are off to the races this year beating first quarter projections. Over the last year there has been a lot of insider buying, and no sales of stock. The company has been traded publicly for three years now. They always had a good strategy, they just need to develop enough resorts to benefit from economies of scale. I think that they have reached that point and believe that their stock bottomed out in April and now it is positioned to take off.

In summary: they have a novel idea of indoor family themed waterpark, located in targeted markets capitalizing on location, the trend of shorter more frequent family vacations while providing a truly memorable one-stop family vacation. Think of having a local Disney Resort and you just explained Great Wolf.