It’s tough out there in Toyland.
While there’s no Hula Hoop, Tickle Me Elmo, or Cabbage Patch doll that’s this year’s must-have toy, there are several names out there poised to capitalize on some of the hottest trends in play.
Toy companies poised to be big gainers this holiday season are those with premium names behind them, like Star Wars and Nickelodeon.
Here are the top toy trends and toy stocks to know…
Founded by a small group of disgruntled Atari game developers in 1979, Activision is now the fifth-largest developer of games in the world and is getting bigger.
Stock of parent company Activision Blizzard (ATVI) recently hit an all-time high of $38.89. It started the year at just $21.
The company makes the hottest titles in all of videogamedom, including the Call of Duty, World of Warcraft, and StarCraft series of games.
When Call of Duty: Black Ops III was released last month, the game sold $500 million in copies in its first weekend.
Even better news for investors: The company is now looking beyond game consoles, recently announcing plans to acquire King Digital for $5.9 billion.
Though King isn’t a household name like Activison, its Candy Crush games certainly are.
As gaming becomes more mainstream and more people move to mobile gaming, few companies are capitalizing on the market like Activision.
Also keep an eye on the company’s chief rival, Electronic Arts (EA), which is also seeing unprecedented stock growth.
Talk about a force awakening…
With a new Star Wars film upon us, there’s really only one company that will profit from licensing Star Wars toys and more: Walt Disney (DIS).
Disney has been on a tear, too, and it’s nearing its five-year high, thanks to several hit movies and toy tie-ins.
Though many are betting on Hasbro, the company that’s licensed to produce the Star Wars toys, its stock has been on a wild speculative rollercoaster this year.
So, follow the money to the company that holds the licenses: Disney.
Before the release of Star Wars: The Force Awakens, Disney released promising numbers, with a seven percent increase in earnings to $52.5 million.
Though we look at toys and hot holiday films to boost Disney through the end of the year, it’s also making a big play to become a hot media company, having increased its stake in Vice Media—dropping $400 million on the hip media startup.
Instead of trying to make the next Barbie or Lego, Jakks Pacific (JAKK) has a different model: licensing characters from other companies.
Jakks has agreements with Disney, Hello Kitty, Warner Bros., Nickelodeon and others and makes the super-popular Winx Club dolls.
The company is just 20 years old, a baby compared to other toy companies that have been in the business since Wham-O was a household word, but it’s already seeing $700 million in annual sales.
When it comes to the stock, though it has been trading down from its high from 2011, it’s on the rebound. Several firms say it should reach a target of $11, up from its current $7.98 price.
Some are even calling this company a value stock to buy now because it has consistently beat analysts’ expectations for earnings growth this year.