Toys will always sell, but the toy industry faces serious headwinds. Toys are a highly cyclical business and, despite the S&P hitting all-time highs this week, an economic downturn is expected down the line.
Add to this the ongoing threat of tariffs in the US-China trade war which has prompted CEOs, including Hasbro’s, to lobby Trump to reconsider his tariffs.
Here are the top toymakers and sellers:
SpinMaster has been a growing strongly since going public in 2015, renown for innovation and in establishing a global brand, but the Canadian toymaker has been struggling lately. The street respects its management, but expects the stock to go sideways for a while.
It is a really well run company. It is a dominant player in the toy industry. The business is very lumpy month to month, year to year. Kids are sending more time on-line and not playing with toys.
Yes, the Canadian icon sells toys, lots of them, branding this department the Kids’ Zone. The stock itself is facing various headwinds from e-commerce and leverage from recent acquisitions that the company is still digesting. The recent pullback may offer a buying opportunity, though long-term prospects remain positive.
It has benefited as their stores were deemed essential services. Traffic has increased in the past year. It is trading at a reasonable multiple, but she feels they are limited in geographical scope.
Canada’s dominant bookseller also offers a robust toy section, but Indigo has taken a hit after missing its earnings in the last four quarters.
Has had a huge run and is not sure he would be courageous enough to get onboard at this point. Management has done a remarkable job of building this. He would look for a little lower entry point.
Canada’s Berkshire-Hathaway has endured some big swings in its chart, but investors continue to bet on Prem Watsa’s investing acumen to steer his company to calmer waters with fresh investments in BlackBerry, India and even Toys ‘R’ Us (Canada).
He really has to like it. It got pummelled in the COVID melt-down and since then it has been working in a rough sideways direction, but it is way below its normal valuations standards while the earnings forecasts have bounced back powerfully. It will also help if interest rates go up. He thinks this stock…
Still one of America’s largest toymakers, Mattel has been struggling for the past few years in the face of e-commerce. Losing retailer Toys ‘R’ Us didn’t help. The latest CEO has yet to right this ship, while some investors hope for a buyout to end this company’s woes.
It reported last night monster earnings (95 cents vs. expected 35) and revenue beat (sales up 11%) in its highest quarterly increase ever. Dolls, games and action figures are selling hot. It shot up 9.6% today.
In contrast to Mattel, Hasbro’s stock price has climbed over the past five years, despite Toys ‘R’ Us’ exit in early 2018. Business is so good that Hasbro even opened a movie studio along the lines of Marvel. However, Hasbro faces higher costs in the face of Trump’s tariffs in the face of the ongoing US-China trade war.
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…
As the grown-ups buy tools, the kids play with toys at Home Depot. This sector has some insulation from e-commerce, so the stock continues to do well as homeowners renovate their houses in this late inning of the economic cycle.
Dominant in its category. Will be able to do at-home delivery. Ahead of the curve. Benefiting from downfall of Pier 1 and others. Big and getting bigger. Yield is 2.27%. (Analysts’ price target is $303.05)
A big-box retailer like Costco and Wal-Mart, Big Lots has locations in the U.S., though it failed to break into Canada. Despite beating earnings the last two quarters and underoing a store remodeling campaign, Big Lots stock (and sales) has been struggling since peaking in January 2018.
Stockchase Research Editor: Michael O'Reilly This big lot retailer recently released earnings and showed EPS growth of over 60%. Although a higher cost structure player in the sector the company is on target to reduce costs by $100 million over the next three years. It trades at under 3x PE (compared to peers at 35x)…