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.
Great Canadian company. He likes it. Paw Patrol sales are probably going to slide off but still the top brand for now. The bankruptcy of Toys 'r Us has really disrupted the space. He thinks that all the fear has been priced in. High quality company. It is going to do OK in the next…
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 had a very good run and had a bit of a dip here. The worst for Canada has been seen from an energy price perspective. The retail area is economically sensitive and hot hit.
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.
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).
(Past Top Pick Sept.29, 2017, Up 8%) They sold their majority stake in their Asian insurance business. It does suffer lumpy earnings, but they write profitable insurance. Made a big purchase in Allied World last year. Some of their investments, like the Toronto Star, may or may not work out, but Prem Watsa is a…
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.
This has been a really tough stock. Has come under quite a bit of pressure. You would think it would be a lower beta name and it seems that all beta names have gone up. They have really suffered from low demand. Have all sorts of Frozen stuff, which is supposed to be in high…
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.
When comparing this to Mattel (MAT-Q), you get a really good company. In this game space, you have a consumer stock that has been there forever and that continues to generate wonderful free cash flows. The dividend has been growing at a wonderful pace. Has no problem if he wanted to own this.
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.
(A Top Pick Jun 29/18, Down 4%) A play on household formation in the US. With tax reform last year and with HD-N having plans to increase dividends (maybe over 25% growth), he will continue to hold it.
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.
Has a model price of around $24. Has competition with Costco and Wal-Mart. Good double overnight or just stay where it is.