3 Stocks to Profitably Play the Furby Frenzy of 2012
Ken is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In 1998, Hasbro (NASDAQ: HAS) released Furby. The colorful creature instantly became an iconic must-have toy, and over the ensuing three years over 40 million bug-eyed babbling Furbys were sold. A short 14 years later, it is time once again for investors to prepare their portfolio to profit from the coming Furby Frenzy. The lovable owl/bat is back for 2012, and it is on the top toy lists for this holiday season.
Two Ways to Play the Furby Frenzy of 2012
The most direct route to play the Furby Frenzy is to buy shares of Hasbro. If gift givers crave Furby like they did in 1998, Hasbro will see a welcome boost to its flat US toy revenue. Furby is emblematic of the thesis for buying Hasbro shares – Hasbro has an enormous intellectual property vault with beloved brands like Nerf, My Little Pony, Transformers, and Stretch Armstrong. The company plans to unleash the vault's value by reinventing these classic brands to make them more attractive to the digital generation. An example of this toy-to-digital reinvention is Furby’s integration with Apple’s (NASDAQ: AAPL) iPad. Download the Furby app and your iPad translates Furbish-to-English and allows your critter to interact with other Furbys around the planet.
The other way to profit from the Furby Frenzy is by purchasing shares in the dominant resellers that profit each time a toy is sold. My advice is to steer clear of brick and mortar resellers like Wal-mart (NYSE: WMT) that can only profit when they keep top-selling toys in stock. If holiday scenes from 1998 repeat, Wal-mart will run out of inventory faster than you can say, “Black Friday Furby Freakout!” My money (and my All-Star CAPS rating) is with the rapidly growing e-commerce companies that are poised to profit even if toys become scarce on retail shelves this December.
Specificly, investors should consider loading up on Amazon (NASDAQ: AMZN) and eBay (NASDAQ: EBAY). The genius of e-commerce is that Amazon and eBay don’t need to fret about inventory problems. If toy supplies fail to keep up with demand, independent resellers will jump at the chance to franticly flip their Furby for a quick profit. Amazon and eBay, with little to no extra investment, get to just sit back and collect fees from seller’s profits and Paypal commissions. As an added bonus, holiday shoppers looking for scarce Furbys are likely to browse through the virtual shelves of these giant e-tailers. Each new shopper Furby entices to e-commerce brings with them a potential lifetime of online shopping revenues.
The proof of Furby’s success is already showing up on Amazon’s sales rank pages. The Teal and Purple versions are enjoying nearly three weeks in Amazon’s top 100 selling “Toys and Games.” With early success like this, investors should be chomping at the bit to get a piece of the Furby Frenzy of 2012.
Do you agree? I love a good debate, so please add your comments in the section below and then head over to the Motley Fool CAPS ranking system and make your prediction public.
Interested in Additional Analysis?
The stakes are high and the opportunity is huge after Apple’s introduction of the iPhone 5, so to help investors understand this epic Apple event, the Fool has released an exclusive update dedicated to the iPhone 5. By picking up a copy of this premium research report on Apple, you'll learn everything you need to know, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.
BoiseKen owns shares of Apple, Amazon.com, and Hasbro. The Motley Fool owns shares of Apple, Amazon.com, and Hasbro. Motley Fool newsletter services recommend Amazon.com, Apple, eBay, and Hasbro. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.