Many investors think the holiday season is the only time to consider toy stocks as many families are thinking about which toys to purchase for their kids. However, what you may not realize is that toy stocks can make a great investment throughout the whole year as well. We’ve rounded up some of the best toy stocks on the market that investors should consider adding to their portfolio.
In a year that has felt particularly bleak, toys can bring joy to children and their families. The coronavirus pandemic did present some unique challenges for the industry this year. However, the holidays are likely to provide a much-needed boost.
The toy industry is evolving and incorporating new technology to appeal to today’s children. This year, kids are also spending much more time at home, which means they might be spending more time playing with toys than they normally would be. Here are some of the leading toy companies to consider investing in right now.
Best Toy Stocks To Buy
Mattel (NASDAQ: MAT)
Mattel is one of the world’s most established toy developers. They own several beloved doll brands, including Barbie, American Girl, and Polly Pocket. They’re also known for brands like Fisher-Price, Hot Wheels, and Thomas & Friends, just to name a few.
This company is based in California and has been one of the largest toy manufacturers in the United States since the 1950s. Their stock struggled in early 2020, but has since bounced back. However, they have been unable to return to the highs they experienced in 2014. When the pandemic hit, Mattel suffered serious sales losses.
However, this doesn’t mean you should rule Mattel out when building your portfolio. The company’s losses have forced them to readjust their strategy for the next few years. They’re focusing on dolls like Barbie, which have historically performed well regardless of changing trends.
Mattel is also shifting their focus to digital entertainment, including a Hot Wheels mobile game. This diversification could help their business bounce back over the next several years.
With a long history of financial success, Mattel is a trustworthy investment. Their shares are very affordable right now, which could make it a great time to invest.
Walt Disney Company (NYSE: DIS)
Since its founding in the 1920s, the Walt Disney Company has always been synonymous with children’s entertainment. They may be best known for their movies, TV shows, and theme parks, but Disney also makes toys that bring their most popular characters to life.
Walt Disney founded the company in California as an animation studio. After huge success in movie production, the company started to expand in the 1980s with television content as well as their theme parks and hotels.
Disney stock is part of the Dow Jones and is often recommended as a safe buy for those just starting to build their portfolio. Although Disney struggled in early 2020 with the closure of their theme parks, partial reopenings and a booming streaming service has helped their stock come back even stronger than it was before the pandemic.
Although toys are not Disney’s main product, they’re still likely to do well going into the holiday season. Disney characters have huge fan bases, and product sales are likely to reflect that.
Since Disney has diversified revenue streams, it’s less risky than some of the other stocks on this list. Now is a great time to buy this stock, as shares could jump up in price when the global economy fully recovers.
Walmart (NYSE: WMT)
Walmart is a big box retailer with locations throughout the US. They sell everything from toys to clothing to electronics, and they are a very popular place to go for holiday shopping.
Walmart is the world’s largest private employer and the largest company in the United States by revenue. They have operations all over the world, and are known for their affordable pricing. Affordable products could be a particularly big draw this year, as the economic crisis has forced many people to re-evaluate their personal finances.
Unlike many other major retailers, Walmart’s stock has gone up dramatically this year, albeit with some fluctuation. Their third quarter earnings exceeded market expectations. Holiday sales will likely keep earnings steady for the rest of the year, even as the economy falters.
In general, Walmart is a steady stock that works well as a long-term investment. While transitioning to e-commerce has presented some challenges in 2020, but it hasn’t really slowed them down much. Walmart recently launched Walmart+, an online service designed to compete with Amazon Prime.
Target (NYSE: TGT)
Target is another large retailer with stores throughout the United States. They have a huge selection of toys available, and are also known for things like home decor, clothing, and entertainment products. Target’s business model is similar to Walmart’s, but they set themselves apart by focusing more on the consumer experience.
Target has a sleek brand image and is known for quality products. While their prices are slightly higher than Walmart’s, they generally won’t break the bank. In 2020, consumers who might have traditionally purchased luxury items have turned to Target for alternatives.
To combat the challenges of the pandemic, Target is shifting their focus to e-commerce. They offer reliable delivery and no-contact pickup services, which consumers have been using in increasing numbers.
Target’s sales in the third quarter of 2020 were very strong, especially when compared with other retailers that have struggled during the stay-at-home orders.
Their excellent selection of toys and gifts means they’re likely to do well during the holidays. It’s also likely that their finances will become even more stable as the economy recovers.
Target stock hit a peak at the end of November 2020 and has since dropped slightly. A dip in their stock price could make it a good time to invest in this company, especially as we move into the holiday season.
Best Toy Company Stocks
Funko (NASDAQ: FNKO)
Funko is one of the hottest toy brands on the market right now. They make collectible dolls and other merchandise based on pop culture characters and celebrities. These include characters from movies, TV, and video games, as well as actors, musicians, and more.
Their most sought-after toys are their Funko Pop dolls and minis. They also make keychains, apparel, and other fun items. One of the things that make Funko Pop dolls so popular is that they appeal to people of all ages. Both kids and parents can enjoy building a collection of their favorite characters.
Funko stock is very affordable, but it also can be quite volatile. However, now may be a good time to purchase. The stock took a dip earlier this year, but is now on an upward trajectory. The holidays are likely to increase Funko’s sales, so it’s likely that stock growth will follow.
Hasbro (NASDAQ: HAS)
Hasbro is another one of the world’s largest toy companies. They make both toys and board games, and some of their earnings also come from TV shows related to their brands. They are currently headquartered in Pawtucket, Rhode Island.
Some of Hasbro’s top brands include Power Rangers, Transformers, My Little Pony, and G.I Joe. They also make classic party games like Monopoly and Twister, as well as Nerf toys.
Although they’ve struggled in 2020, Hasbro stock is still more expensive than many other manufacturers of kids’ products. However, there’s a good reason for this. They’ve taken steps to adjust their finances and are putting e-commerce first.
Hasbro also has plenty of movies and TV shows in development that could be very lucrative, such as an upcoming My Little Pony film. Additionally, they have contracts to make toys for popular Disney and Universal Studios brands.
Hasbro is fairly expensive, and data indicates that they may be overvalued. Investors may want to wait for a price dip before buying. However, Hasbro’s status as one of the largest companies in the industry means that they’re a good bet for the long term.
Toy Company Penny Stocks
Vinco Ventures (NASDAQ: BBIG)
Vinco Ventures is a holding company headquartered in Pennsylvania. Their largest subsidiary is a company called Edison Nation, which connects product designers with partners that could potentially manufacture and market their products. Innovators can submit a design, which Edison Nation can help with licensing, marketing, and other services.
Although Edison Nation works with many different types of products, they’re known for developing exciting new toys. They’ve even partnered with larger organizations like Mattel in the past to find innovative new products.
Vinco Ventures is a penny stock, which means that it can be very volatile. You should always be cautious when investing in penny stocks for this reason. However, low prices can present opportunity for growth without excess risk. Buying this stock could be an investment in the toys of the future.
JAKKS Pacific (NASDAQ: JAKK)
JAKKS Pacific is a toy company based in southern California. They make a wide range of toys, including action figures, dress-up products, craft sets, and more. Their most notable product line is the Plug It In & Play TV set. These are electronic devices that plug into a TV set and contain a variety of video games and other content.
Over the past few decades, JAKKS released a huge selection of these games. Some of them were from popular entertainment franchises like Disney and Nickelodeon.
JAKKS also makes a wide range of classic toys, with most of their products targeted at young kids. Their partnerships with larger entertainment franchises have helped them stay relevant over the years.
Like many other manufacturers, JAKKS struggled in 2020. Their stock value dipped in March with a rebound over the summer, but has since dropped. However, investors may want to consider purchasing this affordable stock now. The holiday season will likely bring some growth in the next few months, so this stock could work for a short-term growth strategy.
Should You Invest In Toy Stocks?
Times are changing fast, and you might be wondering whether the toy industry is still worth investing in. Although the market is changing fast, kids still use toys, especially ones that integrate with today’s digital technology.
The pandemic has also changed the way that kids play with toys. Families are now spending more time at home, and there’s increased demand for products that will keep kids entertained on their own.
The most savvy manufacturers and retailers continually adjust their products to keep up with hot entertainment trends. Since kids are spending more time on their electronic devices, many popular toys now integrate with software programs.
Kids also love toys that relate to broader pop culture trends, such as movies, television shows, sports, video games, and music. They’re exposed to pop culture at younger ages now due to their smart devices. Manufacturers and retailers are capitalizing on this to keep their products current.
You’ll want to ensure that the companies you’re investing in have a strong business plan moving forward and aren’t resting on their laurels. Many of today’s top toy developers have diversified income streams as well. This helps them stay financially stable even as the economy evolves.
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Best Toy Company Stocks: Final Thoughts
With the holiday season coming up, consumers will be spending more of their money on toys and other gifts for their children. With kids at home for most of the day, now is a good time to be buying stocks in the toy industry.
Toy companies will likely see their shares increase in price slightly over the next few months due to holiday sales. Many are also looking for new ways to innovate and diversify in a changing economy.
While these stocks aren’t likely to see explosive growth, established toy companies can be a great long-term buy for a stable portfolio.