Sunday, October 17, 2010

"They may be foreclosing on the house, but you can bet that the kids will get their toy gifts for the holidays"

Dow Jones Industrial Avg. 11,063  (UP) for the week ending  10-15-2010

Star Wars - Darth Tater Figure
 PlaySkool - Hasbro
  Times are tough. 462,000 people applied for unemployment benefits last week. Housing prices are bottoming and foreclosures seem to be on the rise. But you can take it to the bank  " Kids will not go without receiving their share of toy gifts during the holidays".

The most rock solid company in this area seems to be Hasbro Inc. (Symbol HAS, $45.08). Hasbro stock chart has been on a steady rise during 2010. This stock has had a one year Total return of 67.9% and a 3 year Total return of 58.6%. If you had invested $1000 five years ago it would be worth $2713 today. Earnings for 2010 are $2.65 per share and for 2011 $3.12 per share. Transformers, Dora the Explorer, Yahtzee, Hannah Montana, and Mr. Potato Head are among the over 100 brands they have.

The second very well recognized brand in this category is Mattel.  Mattel Inc. (Symbol MAT, $22.45) had got beaten up a little bit the end of this week for some soft Q3 top line sales and the stock is now a pretty good value at this price. Mattel has some long term debt to work off. They had bought out Fisher-Price back in 1993 to challenge HasbroMattel and RC2 (symbol RCRC) have both been under the gun for lead paint on toys and baby bottles and have had to do some financial settlements. Don't forget Barbie and HotWheels!

My Sleeper Pick in the toys area is  SHANDA GAMES LIMITED ADR (symbol GAME, $6.52). This very profitable company is something to take a flyer out on as a more speculative pick. The financials look pretty good and I do not see any analysts following it. The stock is down this year on a Goldman Sachs, June downgrade and I think no one is paying attention to it now. It is a play on online games in China and area that surely will have allot of growth. 

In the Electronics games area I still like Activision Blizzard Inc. (Symbol ATVI, $11.37)  because of their tremendous balance sheet.

HHGREGG INC. (Symbol HGG, $23.96) which sells video games and systems looks like a younger version of Radio Shack (Symbol RSH) and appears to be growing nicely.  It has a one year total return of 45.3% and a 3 year total return of 52%.

What is America's favorite toy?  I will let you decide that.  Hopefully it is something that is creative to develop those young minds and fun most importantly. 


  (We went with a new cleaner logo this week and took off the non-stock related personal stuff)

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