Comment of the Day

February 11 2013

Commentary by Eoin Treacy


Eoin Treacy's view As part of our family's Chinese New Year celebrations we always bring our daughters to the toy store rather than handing them red envelopes. It struck me as interesting yesterday that from the wide array of products they both selected different toys from the same manufacturer. This prompted me to take a closer look at the shares.

One might imagine that with consumer sentiment in Europe and the USA still struggling to recover that the toy sector would also suffer. However, the two largest companies exhibit patterns of demand dominance.

Mattel yields 3.57% and has a forward P/E of 14. The share continues to trend higher and while somewhat overbought in the short term, a sustained move below the 200-day MA, currently near $35, would be required to begin to question the consistency of the medium-term advance.

Hasbro yields 4.01% and also has a forward P/E of 14. The share has been mostly rangebound since August 2011 but is currently testing the upper side of its base and a clear downward dynamic would be required to check potential for a successful break above $40.

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