How to Play It: Sizing up the toy market

Thu Feb 16, 2012 2:52pm EST
 
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By David K. Randall

NEW YORK (Reuters) - Child's play is big business.

At the annual American International Toy Fair in New York this week, analysts and retailers are scouring the floor for what could become the must-have holiday item this fall.

It's an industry that's easy for investors to overlook. Plastic toys don't have the same wow factor as a tablet computer or a breakthrough in clean energy.

Behind the fun and games are challenges the industry itself must navigate. U.S. retail sales slipped 2 percent to $21.2 billion last year, according to the NPD Group. Analysts point to weaker spending on toys for non-family members as a factor. Toy companies like Hasbro Inc (HAS.O: Quote) and Mattel Inc (MAT.O: Quote) find themselves increasingly competing with online games.

To play the toy market now, try these strategies:

OPTIONS FOR INCOME INVESTORS

Mattel and Hasbro, the two dominant public toy companies, have a special appeal to investors looking for income.

Toy prices are expected to rise due to a 20 percent increase in China's minimum wage within Guangdong province which produces many toys in the U.S. market.   Continued...