Bullish on a Recreation Company

The winter 2016/2017 ski season was strong in the Pacific northwest, Utah, and British Columbia, while Colorado experienced more tempered conditions. Ticket prices at major ski resorts are at all time highs, which is driving consumers to purchase season passes as a more economical alternative. A single ski day for an adult at Vail can cost $160/day, and most of their other resorts aren't far behind. Within the last year Vail Resorts (MTN) announced that they purchased Whistler Blackcomb in British Columbia, Canada, and this is a large addition to their footprint as they seem to reach a point of saturation in the US.

However, the real asset for Vail isn't lift ticket revenue, they develop land on their properties into resorts, luxury condos and high-end single family residences. The land value, development value and ongoing lodging revenue should provide a solid base of revenue and growth for the top ski resort operator in the world. They also happen to be known for top-notch customer service. There are no signs that this formula will slow down for Vail, and while they trade at a rich P/E or 46, the stock has been a steady performer over the past year.

We like the long-term bull thesis on Vail, but shares are pricey at $214 per share today and we are selling the October $160 Puts for $0.65. This strike represents a 25% discount from it's current price, and we'd be happy to purchase the stock at that level over the next 141 days or keep the premium if the stock stays above $160.