Spin Master Toys: Hasbro Has Met Their Match

3/29/18

When you think about the top toy brands in the world, two spring to mind right away: Mattel (MAT) and Hasbro (HAS). While children continue to gravitate more towards electronic devices, the toy industry is still growing well. In particular, it is experiencing strong growth in emerging economies. It has recently undergone a pullback on a combination of market and sector weakness. I would recommend starting an immediate position in the name, to take advantage of recent share weakness. The market is nearing its 200 day support and should see an upward move come April. The liquidation of Toys R Us stores has caused a shakeup in the sector, as much of the sales still come in normal retail outlets. Over time, more sales will move online, but this is still a turbulent period for the toy space, which is currently in a time of single digit growth. Spin Master (OTC:SNMSF) is outperforming its peers as it grows its global footprint - exceptional growth outside North America is leading to large revenue gains. This growing global footprint is allowing Spin Master to make accretive acquisitions using their distribution network to sell previously local brands. Taking small and underappreciated brands globally is allowing Spin Master to beat its competition on innovation. Let us take a look at how the toy sector leaders have performed over the past 6 months.

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