The outbreak of the COVID-19 pandemic in 2020 saw schools switch to online classes. In addition, parents were reluctant to take their children to the playgrounds because the risk of exposure to the virus was high. Therefore, with schools and playgrounds inaccessible to children, they needed another form of engagement and this is where toys took center stage. After all, toys have always been a favorite with children.
Notably, the trend is also expected to continue in the near future. According to a ReportLinker report, the global dolls, toys and games market is expected to experience a CAGR of 4.4% in 2021, reaching $ 102.26 billion from $ 97.99 billion in 2020, as mentioned in a report. GlobeNewswire article. Additionally, the article mentioned that the global doll, toy, and marketplace market is expected to reach $ 135.66 billion by 2025, at a CAGR of 7%.
US sees robust toy sales in 2020
The article further mentioned that in 2020, North America was the second region in terms of market share and accounted for 27% of the global market for dolls, toys and games. In view of this, the NPD Group reported that retail sales of toys in the United States have seen a 16% increase in 2020, to reach $ 25.1 billion.
The report mentions that with the closure of schools, disposable income has shifted from other forms of entertainment to toys, with stimulus checks providing support as well. In fact, the report says May saw the highest growth in retail toy sales of 38%, thanks to the distribution of stimulus checks starting in April. Meanwhile, the holiday season also contributed to the growth in toy sales, with October seeing a 33% increase.
E-commerce aid toy sales
E-commerce has become a must-have option for consumers as it offers the convenience of choosing from a plethora of products without having to physically walk through the different sections of a store and have them delivered to their doorstep. Notably, the COVID-19 pandemic only helped to reinforce this reliance on online shopping as physical stores were closed. Even when the stores reopened, consumers were hesitant to visit them.
Notably, parents also bought toys online. In fact, the NDP report mentions that in the United States, the first three quarters of 2020 saw online toy sales increase 75% year over year. Interestingly, the trend is expected to continue in 2021 even as the vaccination campaign continues to accelerate in the United States. Notably, IBISWorld predicted that the market size of online sales of children’s toys in the United States is expected to reach 4.6% increase This year.
3 stocks to watch closely
Toys have always been a favorite pastime of children and despite the challenges posed by the pandemic, sales have increased, especially in the United States, and are also expected to increase in the future. Therefore, this seems like a good time to look at companies with strong fundamentals, which can make the most of this potential. In particular, we have selected three of these stocks which carry a Zacks ranking n ° 1 (strong buy), 2 (buy) or 3 (conservation). You can see The full list of today’s Zacks # 1 Rank stocks here.
Mattel, Inc. MAT, a children’s entertainment company, designs and manufactures toys and consumer products around the world. The company currently has a Zacks Rank # 1. Zacks’ consensus estimate for current year earnings has risen 13.5% in the past 60 days. The company’s expected profit growth rate for the current year is 55.6%.
JAKKS Pacific, Inc. JAKK develops, produces and markets toys, consumables, electronic devices and related products worldwide. The company currently has a Zacks Rank # 2. Zacks’ consensus estimate for current year earnings has improved 3.1% in the past 60 days. The company’s expected profit growth rate for the current year is 63.4%.
Hasbro, Inc. HAS, together with its subsidiaries, operates as a games and entertainment company and market segments in the United States and Canada and sells action figures, arts and crafts, and creative game products, among others. The company currently has a Zacks Rank # 3. Zacks’ consensus estimate for current year earnings has risen 0.2% in the past 60 days. The company’s expected profit growth rate for the current year is 14.2%.
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