Toys will always sell, 8 Toy Stocks to Buy in 2019
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.
Depends on growth rate. One thing they've struggled with is future growth. He needs to see serious levers for growth that make sense from a risk/reward perspective.
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.
Online shopping taking major toll on business.Not as many visitors in the past.Business not competing well with Amazon.Rewards program not very good.Not a good time to invest in business.
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).
P&C insurance is doing very well, though this year is tougher than most because of catastrophic losses. So they raise their prices. One of the lower combined ratios in the space. Benefits from higher interest rates. Outlook is for double-digit returns over the next several years.
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.
They just delivered sub-optimal numbers. Suffered supply chain shortages last year. Maybe there was less demand after Covid? We knew things were bad when they pulled their forecast last October. Q4 revenue was down 22% YOY and an 11-cent earnings miss. Their latest full-year forecast is weaker.
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.
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.
retail He owns retail, but not names like LULU or Nike, but rather defensive ones like this. He sees more weakness in pooer consumers (i.e. Dollar General which plunged recently). HD benefits from the general consumer trade-down of staying in your home longer and fixing it up. The days of consumers being flush with cash…
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.
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. BIG's small size ($141M) and debt ($2.3B) and losses ($180M last year) do make it very financially risky. Bloomberg calculates a 'default risk ratio' and it is 27.3%, about as high as we see on a company that has yet to restructure. The dividend was…