The leisure products industry includes companies across multiple sectors, including toys, video games, sports equipment, and recreational vehicles. These stocks often rise when the economy is healthy, unemployment is low, and disposable income is high. They fall out of favor when the opposite happens, since they aren't considered as essential as food and clothing.

Source: Pixabay.

Let's take a look at two top stocks investors should watch in this industry -- toymaker Hasbro (NASDAQ:HAS) and video game publisher Electronic Arts (NASDAQ:EA).

Shares of Hasbro have risen 56% over the past 12 months, while shares of rival Mattel (NASDAQ:MAT) have plunged 34%. Last quarter, Hasbro's sales rose 5% annually on a constant currency basis, while Mattel's slipped 1%. Hasbro's net income improved 25%, but Mattel posted a net loss.

The reason for that disparity is simple -- Hasbro licenses hot franchises based on blockbuster films, while a large portion of Mattel's revenue comes from Barbie, an aging franchise which has lost its appeal with young girls. Last quarter, Hasbro posted 1% annual sales growth at its boys category, which accounted for 43% of its top line, thanks to strong demand for Jurassic World, Marvel, and Star Wars toys. The Jurassic World effect also lifted sales of its preschool products by 14% to claim 15% of Hasbro's total sales.

Hasbro's Jurassic World and Marvel toys. Source: Hasbro.

The main sore spot for Hasbro was its girls' business, which accounted for 16% of its revenue. Sales slipped 22% annually due to lower demand for My Little Pony, Furby, and Nerf Rebelle products.

Meanwhile, Mattel is more exposed than Hasbro to girls' brands. Last quarter, sales of Barbie and its "other girls" brands respectively declined 11% and 6% annually on a constant currency basis. Together, those two categories accounted for over half of its top line. Mattel's sole bright spot had been its exclusive right to manufacture Disney's (NYSE:DIS) popular Frozen dolls. Unfortunately, Hasbro was also granted the right to sell Disney princess dolls, including the Frozen characters, starting in 2016.

Therefore, if you're looking for a toymaker which can profit from upcoming Marvel, Star Wars, and Disney films, Hasbro fits the bill perfectly.

Electronic Arts
Moving on from toys, let's check in on Electronic Arts (NASDAQ:EA), one of the largest game publishers in the world. Last quarter, EA's revenue rose 5.5% annually as net income improved 7.6%. By comparison, rival Activision Blizzard's (NASDAQ:ATVI) revenue rose 15% annually as net income climbed 34.5% last quarter. Activision looks like a better growth play, but EA is a more stable investment for three key reasons -- digital strength, diversification, and mobile growth.

52% of EA's revenue came from higher-margin digital platforms last quarter, versus 44% a year earlier. By comparison, 45% of Activision's revenue came from digital sales last quarter. EA's gaming portfolio is well-diversified across multiple genres, including sports games, shooters like Battlefield Hardline, RPGs like Dragon Age: Inquisition, licensed Star Wars games, and mobile titles. By comparison, Activision still relies heavily on three aging franchises -- World of Warcraft, Call of Duty, and Skylanders.

Star Wars: Battlefront. Source: EA.

Looking ahead, EA's most eagerly anticipated game is Star Wars: Battlefront, an online role playing game which will launch in November to coincide with the Disney's release of Star Wars: Episode VII in December. If Battlefront is a hit, it could lure users away from other online RPGs like World of Warcraft.

On mobile devices, EA's revenue rose 18% annually to $136 million as monthly active users hit 165 million, thanks to the strong performance of games like Simpsons: Tapped Out. Activision's mobile revenues, which came from games like Hearthstone: Heroes of Warcraft, only rose 4% annually to $86 million last quarter. This puts EA in a better position to capitalize on rising sales of mobile games, which could double from $17.5 billion in 2013 to $35.4 billion in 2017, according to research firms AppLift and Newzoo.

The verdict
Leisure stocks like Hasbro and EA are "sunny day stocks" which will do well as long as consumer confidence remains high. However, that exuberance is also pushing both stocks to premium valuations -- Hasbro and EA now respectively trade at 26 and 28 times trailing earnings, compared to the S&P 500's P/E of 21. Therefore, investors should keep an eye on both stocks, but they should also realize that neither one is fundamentally cheap.