Santa’s Watchlist

If you haven’t noticed yet but christmas is only a few days away. Its the time of year when toy companies get all the attention. So why not take advantage of this yearly boom and add a few toy companies to your watchlist? I have personally had Spin Master(TOY) on my watchlist for a long time. They are actually a Canadian company but they sell their toys all over the world. They are also the smallest of the 3 toy companies I want to talk about. The other 2 are Mattel(MAT) who is the second biggest and Hasbro(HAS) who is the biggest(per market cap).

Of these 3 companies Spin Master is the only Canadian one and listed on the TSX and the other 2 are in the US and both listed on the Nasdaq. These 3 companies are actually the biggest toy makers in North America and are all pretty good investments. So far since the market drop only Mattel has actually recovered higher then their share price. Mattel and Spin Master are still working on their recovery but they are recovering which is nice. I am really hoping that with Christmas coming up in just a few days that they can all get a nice boost from a very bad year so far.

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Firstly I would like to talk about Spin Master, they are the only Canadian company on this short list but they pack some toys with big names. They currently make toys for Paw Patrol, Etch A Sketch, Hatchimals, Angry Birds, Ninja Turtles, Star Wars, Peppa Pig and they recently bought the Rubik’s Cube for $50 Million. This isn’t even everyone that they make toys for, not to mention they don’t only make toys. They also make board games and have their own kids TV shows. They have really accomplished alot in in the toy industry especially since they started in 1994. They only have 1800 employees in 28 offices around the world. They have had a pretty good run from 2015-2018 but in 2019 their revenue actually dropped a little. They went from $2.2 Billion in revenue in 2018 to $2.05 Billion in 2019. I have a feeling that this year will be somewhat of the same thing. Regardless though, with their latest transactions and ability to continue to grow I feel that the holidays can give them the nice boost that they need and keep them on Santa’s watch list.

Spin Master(TOY)-$29.86CAD/Share, $3.0 Billion Market Cap, 0.34 EPS, 46.9 P/E(forward), Dividend N/A.

Next I would like to talk about Mattel, they are a very common house hold name. They make Barbie, Fisher Price, Polly Pocket, American Girl and Hotwheels(just to name a few). The company has been around since 1945 and has over 26,000 employees and has over 250 different brands. Right now Mattel is the only one who above what they were when the pandemic happened. Thats about the only good news for them though, they have been having a rough couple of years with severely declining revenue since at least 2015. Their revenue in 2019 wasn’t to much less than it was in 2018 which was $4.51 Billion in 2018 and $4.50 Billion in 2019. Although its not a big decline its still not a trend you want to invest in unless the company has some big plans. But in order for that to happen they need a CEO that is going to stick around longer then 2 years. On a positive they did beat their earnings in the last 2 quarters, this contributes to their recent positive trend in share price and might be able to keep them on Santa’s watch list depending on how busy Christmas is for them.

Mattel(MAT)-$17.53USD/Share, $6.17 Billion Market Cap, -0.01 EPS, 47.5 P/E(forward), Dividend N/A.

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Lastly I would like to talk about Hasbro, they are probably the most common of the toy company names. They make Transformers, G.I Joe, Power Rangers, Monopoly, Nerf, Furby, Playschool and Tonka. Chances are you(just like me) not only have 1 game of monopoly but also own one of its many spinoff versions as well. Hasbro has been around since 1923, they have about 5,800 employees and is the biggest toy maker of all 3(per market cap). Much like the other 2 Hasbro not only makes toys and board games they also have their own TV shows and Movies. In fact, last year they joined up with West Edmonton Mall’s Galaxyland to give it a makeover and redoing rides. I would have to say that Hasbro is probably the safest of these 3 companies. They are rebounding off their all time high that was just over a year ago and are coming back from the market crash that happened earlier this year. Their Revenue is fairly consistent in being up year over year and they beat their earnings in Q3 of this year(and Q4 of last year). They are also the only one that pays a dividend right now and has paid it right through this pandemic. Right now I would say that they are at the top of Santa’s watch list.

Hasbro(HAS)-$92.38USD/Share, $12.8 Billion Market Cap, 2.86 EPS, 26.0 P/E Forward, Dividend Yield of 2.91% and Dividend Payout Ratio of 66.7% (12 months trailing).

I will definitely be keeping my eyes on these guys over the holidays. Spin Master is 1 company that I feel has the most to grow especially seeing how they are still in the growing stages and have managed to acquire a few companies in the last couple years. All 3 companies have their trademark toys, games and media entertainment which gives them each a fair chance at market share and none of the 3 have a complete stranglehold on the toy industry. This makes me believe that any of them would be a good investment and a long term one at that. The only downside I feel is that the toy industry can be a little cyclical. I know that there is some kids birthday every day of the year but Christmas is the real money maker.

That is all for today and remember everyone, invest in yourself first.

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*Disclaimer, all share prices are after market close as of today December 21, 2020. I currently do not hold any positions in any of these companies.

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