High Video Game & Ecommerce Sales: 3 Toy Stocks To Watch Out For – July 5, 2021
The toy industry is doing exceptionally well, despite the pandemic scenario. The epidemic has forced people to spend more time at home and parents are spending more on toys and games. This change in the spending structure helps the industry.
Meanwhile, the industry continues to demonstrate resilience through its transformed strategic roadmap. First, toy manufacturers have resorted to reducing product costs and operating expenses, thereby enabling them to be profitable from their respective major product categories. Second, they worked on initiatives to remove low-margin products from their portfolios and take into account the full cost of a product outside of ex-factory costs. The procedure leads to lower reserves for allocations and fewer margin closing sales, paving the way for a leaner and more focused organization.
Additionally, companies are optimizing their respective operations and accelerating revenue growth by capturing the full value of their respective IPs, through franchise management as well as online retail and e-commerce.
Video games: a determining factor
The fact that children see their parents spending so much time and effort on home improvement and improvement projects has most likely mimicked in their play habits. Notably, the demand for toys related to video games has remained. strong.
This makes sense, as video games performed extremely well in the past year, with kids spending more time at home. This exposure to digital play experiences has increased the demand for toys.
According to the NPD report, total video game sales continued to climb in May 2021. Total video game sales amounted to about $ 4.5 billion in May 2021, up 3% year-on-year. the other.
High hopes for e-commerce
Meanwhile, the pandemic scenario continues to change consumer buying behaviors, accelerating the transition to digital platforms. In particular, online retailers are enjoying success as consumers increasingly adopt platforms such as online retailers, dedicated shopping sites of major retailers, click and collect, and social media. In addition, businesses enjoy continued support from pure e-com retailers and omnichannel retailers due to investments in technology and services such as curbside pickup.
According to Statista Research Department, online retail sales in the United States in the toys, hobbies and DIY segment have generated approximately $ 93 billion (as of May 20, 2021). This suggests an increase of $ 500 million from annual revenues for 2020.
Going forward, the upward trend is expected to continue as Statista Digital Market Outlook estimates that e-commerce revenue (in the U.S. toys, hobbies and DIY market segment) will reach $ 106 billion in 2025.
What future for the industry?
The toy industry is likely to have difficult comparisons in 2021, as both manufacturer and retail sales were exceptionally strong last year. Nonetheless, there is potential for further benefits, as companies have yet to reach their full potential in accordance with their respective PIs. This, along with the focus on design driven innovation, cultural relevance and operational excellence, should benefit the industry in the periods to come.
3 actions to watch
Given the context, this seems like a prudent time to take a look at some toy makers with strong fundamentals that stand to benefit. Here, we’ve highlighted three stocks that have not only outperformed the industry over the past year, but also offer strong prospects. You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
Image source: Zacks Investment Research
Hasbro, Inc. (POSSESSES – Free Report): Based in Pawtucket, RI, Hasbro is engaged in the design, manufacture and marketing of games and toys. The company continues to focus on plans to deliver a solid lineup of entertainment and innovation from E1 and its partners in 2021. On the content side, E1 production is gradually picking up with a new animated series on Netflix and Alien TV. The team also continues to develop and produce new content for Peppa Pig, PJ Mask, and the 2021 feature film My Little Pony. Hasbro is seeing solid play amid the coronavirus pandemic. The company has a supreme gaming portfolio and is refining gaming experiences across a multitude of platforms such as head-to-head gaming, off-map gaming, and digital mobile gaming experiences.
Shares of this company Zacks Rank # 2 (Buy) have gained 29.2% in the past year compared to the industry’s 17.6% growth. In addition, the company’s profits for 2021 are expected to increase by 20.6%. Over the past 90 days, the profit estimate for 2021 has been revised up 4.6%.
JAKKS Pacific, Inc. (JAKK – Free Report): Headquartered in Santa Monica, California, JAKKS Pacific is a multi-brand company that designs and markets a wide range of toys and consumer products. The company’s strategic acquisitions, its strong international footprint, its focus on innovation and its collaborations with popular brands and film franchisees are likely to increase revenue. JAKKS Pacific has regularly introduced novelty in its products to cope with changing children’s play habits and to stimulate demand. Recently, the demand for physical toys has declined due to the preference of young children for digital games and other electronic learning tools. In line with this trend, the company has introduced a number of mobile game and digital game applications as well as physical toys. This will likely help the company capitalize on the demand for smartphone games. JAKKS Pacific also connects with customers through digital videos, display banners and social ads, which will enhance the customer experience. Such an investment in digital innovation will help strengthen the brand in addition to helping the company capitalize on the lucrative technology-based gaming market.
Shares of this company Zacks Rank # 3 (Hold) have jumped 44.1% in the past year. In addition, the company’s profits for 2021 are expected to increase by 53.5%. Over the past 90 days, the loss estimate for 2021 has narrowed to 80 cents from a loss of $ 2.90.
Mattel, Inc. (CARPET – Free Report): Based in El Segundo, Calif., Mattel is the world’s largest toy maker. The ruggedness of the Barbie brand and the sales of Hot Wheels boost its performance. The company also benefits from robust growth in e-commerce and a highly efficient supply chain. Mattel continues to focus on creating innovative products and experiences that inspire, entertain and develop children. It is also making significant progress in transforming Mattel into a high performing, intellectual property-based toy company. Going forward, the company is focusing on cost reduction and productivity initiatives to support growth and rebuild margins.
The shares of this company Zacks Rank # 3 have gained 99.4% in the past year. In addition, the company’s profits in 2021 are expected to increase by 66.7%. In the past 90 days, the profit estimate for 2021 has been revised upwards by 20%.
It’s time to invest in legal marijuana
If you’re looking for big payouts, there couldn’t be a better time to jump into a young industry poised to skyrocket from $ 17.7 billion in 2019 to $ 73.6 billion expected by now. 2027.
After a clean sweep of 6 electoral referendums in 5 states, the pot is now legal in 36 states and federal legalization of DC is expected soon and this could be an even bigger boon for investors. Even before the latest wave of legalization, Zacks Investment Research recommended pot stocks that climbed to + 285.9%
You are invited to consult Zacks Marijuana Moneymakers: An Investor’s Guide. It presents a timely watchlist of pot stocks and ETFs with exceptional growth potential.
Today, download Marijuana Moneymakers FOR FREE >>