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
Yet even companies that haven't had to recall toys have found the retail sales environment difficult to navigate. LeapFrog
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
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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RC2 is a recommendation of Motley Fool Hidden Gems. A 30-day free trial subscription is the gift that keeps on giving. Marvel is a Stock Advisor selection.