Top Christmas toys not just child’s play
01 December, 2015
Investing in Christmas: Who are the companies behind this year's "must have" toys?
Now that we are well and truly into the Christmas shopping season, I decided to do some research on the likely top selling toys this year and the companies behind them.
You have to start with Star Wars. Everybody is excited about the BB-8, the little spherical droid that rolls along driven by an app on your phone, you might have seen it in the Star Wars trailer. When the toy was launched in September the company though they had a month's supply on hand but they sold out in hours. The toy is made by Sphero which, unfortunately for investors, is a privately held San Francisco company, but Disney did a deal and took a stake in the business last year after they realised that the Sphero toy was very similar to the droid in their upcoming movie.
Next on the list this season is a toy called Legendary Yoda, who can spin around 360 degrees swinging his Lightsaber and answers kids' questions about how to become a Jedi. Wal-Mart has said this toy was "one of our most popular pre-orders in toys in a long time." It made by Spin Master is listed on the Toronto stock exchange with the code TOY.
Many people are predicting sales of "Star Wars" toys could surpass those of merchandise tied to Disney's blockbuster "Frozen" which will be a hard task because Elsa costumes have proved to be the biggest selling Disney costume of all time.
You could also look at long standing listed toys companies such include Mattel — makers of that cultural icon Barbie, or Hasbro — recently notable for filling the shelves with various types of Nerf Blasters.
But if you believe toys should be educational you could look at a company called Leapfrog. Leapfrog is a NYSE listed company that focuses on educational toys and its stock price has languished for a long time. Perhaps that says something about the market for educational toys.
Right so those are the companies behind this year's top selling toys?
Yes, but in doing this research there is one investment idea that stands out above all others, and that is to buy the toys themselves!
For an example, for investment returns, you can't go past a 2007 Lego Collector's Edition Millennium Falcon. In 2007 it would have retailed for about $900 which sounds like a lot then, but I just saw one on eBay for $14,000. Unopened. What a bargain!
Research shows that even the average Lego sets kept in pristine condition have proved to be a good building block for a retirement portfolio. They increased in value by an average of 12% per annum over the past 15 years (but be aware pre 2000 sets were more basic and less collectible).
And while you are at it you better get your collection of action figures valued for insurance purposes. Because if you happen to have the Jawa with the vinyl cape from the first Star Wars movie (that would have cost around $2 in 1978) it would now be worth around $15,000.
All that pales in comparison to how you would feel if you parents were cool enough to buy you the first edition of "Where The Wild Things Are" on its release in 1963. Provided you didn't draw all over it in crayon, you would be sitting on enough of a gain to be sailing off in your private boat to be king of the Wild Things.
Are there other ways to profit from popular toy trends at all?
Yes, the key thing to look for is the popular movie merchandise that is likely to rise in value, driven by the releases that are coming out soon and to look out for any collectible toys. You want to find something that is a limited run, and wasn't in the shops for too long.
Just remember to stack the boxes so the corners do not get crushed and keep them out of the sun so they don't fade.