Hasbro builds its strength for long haul
Hasbro (NYSE: HAS) spanks larger rival Mattel on a quarterly basis, so why not wrestle away a key licensed property between quarterly financial updates?
Hasbro has inked a 10-year deal with Sesame Workshop, the Sesame Street creator. Beginning in 2011, Hasbro’s Playskool will begin putting out licensed toys featuring Big Bird, Elmo, Cookie Monster and other popular characters.
Mattel is the company that consumers typically associate with Sesame Workshop characters, thanks to its acquisition of Tickle Me Elmo creator Tyco. Earlier this year, Mattel’s CFO disclosed that the Sesame Street deal ranked among the top 10 licensing agreements in toyland.
Hasbro has been doing well through its licensed lines, but it’s also been benefiting from the celluloid success of its Transformers and G.I. Joe franchises. Both lines’ summer film releases helped move plenty of Hasbro-made playthings this holiday season.
Hasbro is also working with Discovery Communications to reposition Discovery’s fledgling children’s channel to better compete against Disney and Viacom’s Nickelodeon. In a few years, Hasbro may very well be the next Marvel, as it milks its action stars, or a serious power broker in the kid-programming cable business.
Ask the Fool
Q: How should I set up a stock watch list? – J.M., Seattle
A: As you read about companies, jot down the firms you think you might like to invest in. Ideally, enter them into an online portfolio (such as at Yahoo! or AOL) so you can easily track their progress from week to week or month to month. Perhaps pretend that you bought one share of each at the price at which you first noticed the company. (That way you’ll be able to quickly see how much it’s risen or fallen since then.)
As time permits, research the companies on your list and get to know them well. When you’re ready to buy, you’ll be familiar with a bunch of firms and will be able to compare them to see which ones are the most promising. You’ll also be able to notice when companies you like encounter temporary problems and fall significantly in price. As long as the problems seem temporary and not fatal (after some research), these can be attractive buying opportunities.
If need be, you can maintain a watch list on paper.
Q: What are “defensive” stocks? – P.G., Ocala, Fla.
A: Defensive stocks are tied to companies whose fortunes don’t fluctuate too much in relation to the economy. During a recession, for example, people might put off purchasing cars or fur coats or washing machines, but they’ll still be buying food, gasoline, prescription drugs, electricity, telephone service and diapers. Food, soft drinks, tobacco, energy and pharmaceuticals are defensive industries. They’re seen as more stable than their “cyclical” counterparts, such as the homebuilding, steel, automobile and airline industries. Cyclical industries aren’t necessarily to be avoided, but do expect a bumpier ride with them.
My smartest investment
My basic investing policy is to buy quality and hold on – that’s why I now own mostly blue-chip, dividend-paying stocks, reinvesting my dividends and buying more shares when I can. Once in a while, one or two get into trouble. But I keep close tabs, and if I think they won’t help my portfolio, I sell them. But most have performed very well. They got me through the dot-com bubble, mostly holding their own and recovering nicely. I believe we should never be led by emotion when we invest. Study and know what and why you’re buying, and have a lot of patience. Also, don’t be too hard on yourself when you make a mistake – we all do, but hopefully we will learn from them. One more thing: I never take hot stock tips from friends or family – they always get me in trouble. – K.C., Calif.
The Fool Responds: Excellent advice! It’s hard to go wrong with healthy, growing, dividend-paying stocks. Being calm, patient and well-informed will also serve an investor very well.