Surveying the field of toymakers this year, I feel like I've traveled to the Island of Misfit Toys. Will Rudolph's red nose lead a jolly old elf to the rescue?   

Where the the stop-motion-animation Christmas classic had a bird that can't fly (it swims), a train with square wheels, and a Charlie-in-the-box, we've got Easy-Bake ovens that trap kids' hands and burn them, Barbies with magnets that fall out and choke children, and Aqua Dots beads coated with drugs more fitting for the back rooms at Studio 54 than Romper Room.

Investors not toying around
There's no doubt that the reputations of toymakers have taken a beating this year, and none have fallen as hard as RC2 (NASDAQ:RCRC). Shares in the licensee of such popular children's brands as Dora the Explorer, Thomas and Friends, and the Backyardigans have fallen more than 33% since the start of the year. It was the recall of its wooden train sets back in June that seemed to trigger the avalanche of subsequent toy recalls from Hasbro (NYSE:HAS), Mattel (NYSE:MAT), and Mattel's Fisher-Price line.

Yet even companies that haven't had to recall toys have found the retail sales environment difficult to navigate. LeapFrog (NYSE:LF), for example, said that in addition to slack sales of its older lines of toys, a soft economy and consumer wariness following the recalls led it to post a $0.04-per-share loss this past quarter. Others that have managed to remain in positive territory, like Jakks Pacific (NASDAQ:JAKK), also find their shares trading well below the highs they hit this summer.

Take a ride on the Reading
So is this going to be The Year Without Christmas for the toymakers? While pundits are expecting many retailers to get lumps of coal in their stockings, investors facing the sharp elbows of consumers this Black Friday should still consider putting a bow on down-trodden RC2 and placing it under their trees.

While the Thomas and Friends franchise represented 10% of sales in 2006, it is not the only brand that the toymaker has. In addition to Dora and the Backyardigans, it also has Bob the Builder, Lamaze, First Years, and more. At a price-to-sales ratio of 1.10 times estimated 2008 revenues, it's been discounted similarly to Hasbro and is cheaper than Mattel, at forward sales ratios of 1.10 and 1.26 times, respectively.

The Motley Fool Hidden Gems recommendation recently saw Target (NYSE:TGT) agree to stock its toys, so while it has lost shelf space at other retailers, the greater distribution reach of Target will help it offset some of that loss. Perhaps a greater risk is the hesitation toy companies may have in entrusting RC2 with their bands. HIT Entertainment, for example, the licensor of Thomas and Friends, has begun more heavily marketing the plastic versions of its wooden train sets, which were previously marketed by Tomy, which RC2 feels might cut into its owns sales.

The toymaker might have tough times ahead, depending upon parental actions this holiday season. Yet it could be like all those children's classics where Santa saves the day and Christmas dawns as planned, with a stylishly packaged RC2 calling out to be unwrapped by investors.

Naughty or nice?
Do you think RC2 can be good, for goodness' sake? Then head over to our investor intelligence database at Motley Fool CAPS and make a list for RC2 and mark it to outperform the market. Check it twice, because based on your participation we'll identify which stock is the best stock for Black Friday shopping investors. Then sit back and enjoy that extra helping of turkey. Happy Thanksgiving!

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.