Opinions
Brooke Thackray
Hasbro Inc
HAS-Q
WATCH
Oct 27, 2017
$97.140
Stock price when the opinion was issued
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SELL
A huge, huge toymaker. It had a phenomenal run, but has pulled back, but it’s not that far off historical highs. Insiders own about 10%, which is quite a bit in a company this size, but they've been selling a lot of shares, which is a negative indicator. Pays a good dividend. Makes money year after year after year, but has a big huge debt load. He would like to see them pay part of that off. The toy industry can be very cyclical. If he owned this, he would be selling it.
TOP PICK
Stockchase Research Editor: Michael O'Reilly HAS is planning to capitalize on its G.I. Joe brand with a soon to be released movie and grow its other entertainment and game franchises. Recent EPS of $1.00 beat analyst's calls for $0.68. It has a strong cash holdings over $1.4 billion, even after paying down $300 million in debt. It pays a decent dividend backed by a payout ratio under 75% of cashflow. We would buy this with a stop loss at $85, looking to achieve $111 -- upside potential over 15%. Yield 2.87% (Analysts’ price target is $110.71)
TOP PICK
Stockchase Research Editor: Michael O'Reilly HAS's strategy to enter into digital entertainment is reaping rewards and is why the 100 year old toy manufacturer is reiterated as a TOP PICK. It recently released a My Little Pony film on NFLX linked to AMZN shopping - an excellent business model. This has helped the company deal with mitigating supply chain issues that held back sales in Q3. Recently released earnings beat expectations by 15% and its ROE continues above 24%. We also like they increased cash reserves while paying down a sizable chunk of debt. Not going to double your money, but a solid and steady performer. It pays a decent dividend, which has increased for 17 consecutive years, backed by a payout ratio under 55% of expected cashflow. We recommend trailing up the previously recommend stop (from $85) to $88, looking to achieve $116 -- upside potential over 14%. Yield 2.69% (Analysts’ price target is $115.92)
PAST TOP PICK
(A Top Pick Dec 09/21, Down 7.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with HAS has triggered its stop at $93. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 5%, when combined with the previous buy recommendation.
TOP PICK
Stockchase Research Editor: Michael O'Reilly Although recently reported revenue missed projected targets for the quarter, margins are expanding thanks to cost savings. Earnings by this toy manufacturer beat expectations by over 20% and support a ROE of 21%. We like that cash reserves grew in the quarter despite retiring debt. It pays a good dividend that is projected to be less than 50% of cash flow next year. We recommend placing a stop loss at $69, looking to achieve $108 -- upside potential over 30%. Yield 3.53% (Analysts’ price target is $108.18)
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Toy investors seem to be rattled. This is because of Toys “R” Us going bankrupt. Also, a major distribution channel for Mattel and this company is being taken away, which has caused some problems. Technically, the chart shows we haven’t quite broken down through the right shoulder yet, but if we do, that is a bad sign. Although we are in the seasonal period for retail stocks, if the technicals are not living up to it, you may want to pass on it. Look for it to show a little more strength, but if it falls below that neckline, he would be exiting.