What to Hoard if Romney Wins
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Note: This is a very tongue in cheek post.
If Romney wins the election in a few weeks there may be a stampede to hoard certain items if it hasn’t started already. Chiefly, Sesame Street toys and condoms. I am putting up my kids’ old stuffed Big Bird on eBay as we speak. With Romney’s promise not to fund Sesame Street (PBS) and the Republican reproductive platform the biggest, most controversial, and most discussed issue at their convention, condoms and Tickle Me Elmos should be hot items for four years.
I was shocked, shocked to find out how many companies license those reprobates from Sesame Street. Hasbro, Procter & Gamble, Betty Crocker (General Mills), Build-A-Bear Workshop, Fisher-Price (owned by Mattel) and many more privately held companies. What is Mattel going to do with that sybarite Tickle Me Elmo in a Romney administration? Rename him “Please Stay a Respectable Distance Away Elmo”?
It turns out the most popular Halloween costume this year is “Sexy Big Bird”. I don’t even want to know. Should you short Mattel and Hasbro or will there be an underground cult devoted to acquiring these souvenirs of their misguided youth? Poor Elmo, whose only crime was to star in an unseemly film in which he wished every day was Christmas. Poor Mattel, as Tickle Me Elmo has been a stellar selling toy since 1996.
Mattel Inc. (NASDAQ: MAT) is reporting Q3 earnings on October 16 and this “accomplice” will have some ‘splainin’ to do about its Sesame Street toys. Actually, Mattel has a 16.19 P/E and a 3.50% yield with a payout ratio of 49%. Mattel does have a website devoted to toy collectors, Mattycollector.com, in case there is a run on Elmos. Mattel also is offering Monster High dolls which according to early layaway numbers are already getting scarce. Seriously, I think Mattel may have good numbers as it has most of the most popular toy lines including American Girl, Barbie, Hot Wheels and Fisher-Price. Goldman Sachs downgraded competitor Hasbro on October 15 based on a general industry slowdown and in particular, Hasbro's exposure to board games, puzzles, and toys for boys.
With abstinence regarded as the most acceptable and effective (though not real-life practical) form of birth control by Republicans Church & Dwight Co (NYSE: CHD), baking soda conglomerate and top condom manufacturer, may see an upsurge in condom purchases. If people refuse to be abstinent they’ll just have to do it like in the Eisenhower Republican administration, furtively with protection. Didn’t that coincide with the height of the Baby Boom?
Church & Dwight had been on a tear (no pun intended) earlier this year but is now 10% below its 52 week high. All summer, it had been hot, hot, hot, having run from $43 in November 2011 to over $58 in mid-summer. Value players have now pulled out because its yield is only 1.8% and the P/E inflated at 24.28. Quarterly earnings growth has drooped to -4.00% year over year. Church & Dwight reports again on October 29.
Seriously, some stocks to avoid if Romney wins are the gun stocks Sturm, Ruger & Co (NYSE: RGR) and Smith & Wesson Holding Corp (NASDAQ: SWHC). Gun enthusiasts had been loading up on guns in anticipation of a possible Obama win. Despite the fact there has been little to no action on gun control even after some horrifying tragedies this year, gun owners are still insecure about how many they can amass if Obama has a second term. Even serious analysts are saying the big run for these stocks is over.
Just on October 3, a Benchmark analyst noted the torrid pace for gun permit applications monitored by the FBI has slowed to 14% from the 20% plus growth rate from May through August. Ruger, in particular has pulled back from its high despite an attractive 3.40% yield and 15.94 P/E. It reports on October 29.
So, what to do if Romney wins? Hoard your Sesame Street memorabilia, stock up on “protection”, buy big banks, and sell your gun stocks.
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Mattel. Motley Fool newsletter services recommend Mattel. 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.