Why investing in toys could be an absolute gift: Shares soar as people take up hobbies in lockdown
- Savvy investors have won big returns this year betting on toys and games
- Hornby shares soared 30% last month as people take up hobbies in lockdown
- Miniature war games maker Games Workshop returns hit 81.6% this year
When it comes to picking the right stocks, it is not usually child’s play.
But investors have won big returns this year betting on toys and games.
Hornby shares last month steamed ahead nearly 30 per cent after the model railway firm revealed sales had risen 33 per cent.
Play the market: Disney’s Frozen. Shares in Disney have risen 21.8 per cent over the past six months, turning £10,000 into £12,180
The firm, whose brands include Airfix, Corgi and Scalextric, said online sales soared in lockdown. But are toy and entertainment stocks still a good bet?
Stocks for Santa
Games Workshop, maker of miniature war games, has been a star performer with returns hitting 81.6 per cent this year – turning a £10,000 investment made in January to £18,160 today.
Its share price has risen a huge 1,631.9 per cent in the past five years – turning £10,000 in to £163,194.
U.S. toymaker Mattel, which owns Barbie, Fisher-Price, Matchbox and Hot Wheels, announced a 30 per cent rise in sales at the end of October.
Its value fell in March, yet has recovered. A £10,000 investment made in January would now be worth £10,177, but the same investment made in April would become £16,463.
Toymaker Hasbro, owner of Monopoly and Play-Doh, is also listed on the U.S. stock exchange. After losing value in the March coronavirus crash, the share price has risen 31 per cent – turning £10,000 invested six months ago into £13,108.
Rob Burgeman, investment manager at Brewin Dolphin, says Disney could still create some magic after facing difficult times.
He says: ‘The company has had a tough year due to Covid with its parks operations, cinemas, film production and distribution all disrupted and its cruise ships berthed.
‘However, at Christmas, there is something for everyone from Disney.’
Shares in Disney have risen 21.8 per cent over the past six months, turning £10,000 into £12,180.
Old favourite: Corgi’s James Bond Aston Martin DB5. Owner Hornby’s shares last month steamed ahead nearly 30 per cent
Toy shop threat
Experts warn traditional toy businesses could still be a shaky bet.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says: ‘Retailers selling goods classed as non-essential, like Argos, Smyths and The Entertainer, will still be able to offer click and collect service from shops, but with no opportunity to browse ranges in store, they are likely to lose out from those impulse purchases.’
Brewin Dolphin’s Mr Burgeman says the virus will have accelerated the trend towards shopping online at the expense of High Street stores this year.
He says: ‘The fall of Toys ‘R’ Us in 2018 was a stark reminder of how retailers, in general, and toy retailers, in particular, have struggled.’
And he warns: ‘Traditional toys with a modern veneer remain popular, but increasingly, children spend more and more time with electronic devices rather than physical toys.’
As more and more children and adults now play online, computer game firms are booming.
Sony’s latest incarnation of the PlayStation games is on sale from tomorrow in the UK. Its predecessor the Playstation 4 sold more than 112 million worldwide. Sony’s stocks are up 33.1 per cent – turning £10,000 into £13,312.
Nintendo, another Japanese games giant, has returned 33.5 per cent this year – turning £10,000 into £13,357.
Mr Burgeman suggests U.S. games developer Activision Blizzard, behind the Call Of Duty and World Of Warcraft series, plus mobile game Candy Crush. Shares rose 30.1 per cent this year, turning £10,000 into £13,010.
Russ Mould, investment director at broker AJ Bell, says exchange-traded fund VanEck Vectors Video Gaming and eSports ETF (ESPO) follows video games stocks. The fund is up 58.26 per cent this year – turning £10,000 into £15,826.
Keith Bowman, investment analyst at Interactive Investor, says Facebook, which owns virtual reality headset firm Oculus, has launched a free online gaming service. The tech giant’s shares are up 43 per cent this year so far, turning £10,000 into £14,300.
Shares in software giant Microsoft, which owns the Xbox gaming franchise, are also up more than 40 per cent this year — turning £10,000 into £14,280.