Kiddie Tech Stocks to Wrap Before Christmas
Brandy is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Furby is back. The talking robotic creature, which terrified a generation of children by speaking in a demonic voice when the battery got low, is back in stores and expected to be a hot seller this holiday season. But the retro owl-hamster-demon thing isn’t the only tech toy aimed at the youngsters this holiday season.
Consider these two tech stocks for gift wrapping. The products listed below are less likely to make your child require therapy in 10 years than a Furby.
A Hopping Good Tablet
LeapFrog (NYSE: LF) is the manufacturer of the most popular education products for the preschool set. This year, industry publication The Toy Insider named LeapFrog’s newest tablet, the LeapPad 2 Explorer, as the top toy for the holiday season. The LeapPad 2 is joined on this year’s holiday hot list by the Leapster GS, a handheld educational device somewhat equivalent to a Nintendo DS.
The previous model of LeapPads were a hot commodity during last year’s holiday rush, buoyed by parental panic due to a sellout upon the summer release of the product. That tablet helped LeapFrog have a decent fourth quarter, with $210 million in net sales, up 10% from the previous year.
- Potential Problem
LeapPad 2 Explorers cost $99 just for the system, with 5 apps included. Apps downloaded from the App Center start at $5 a pop and external cartridges are available for $25 each. There are over 300 apps available. It would be easy for a parent to run up a pretty large bill after the tablet, apps, and accessories are all purchased.
Parents might find it cheaper to buy a regular tablet upon which a number of free to low-cost educational apps can be installed. It’s unlikely that most parents will toss a $500 iPad at the three-year-old and tell him to have at it, but there are a number of tablets operating Google’s Android that come with a price under $200. The Kindle Fire from Amazon stands out as a prime example.
My cousin Jamie gave her preschool aged son a Kindle Fire, which runs a modified version of Android, instead of a LeapPad, citing the long-term cost savings. She monitors him when he uses it but has never had a problem. And, unlike the LeapPad, her son won’t outgrow the tablet’s educational activities.
But there’s a lot of LeapFrog loyalty and it has a strong reputation for its educational products. The Leapster GS is cheaper at $70 and though it does share the same App Center, it may seem like a reasonable deal to hesitant parents.
Reach for the Sky(landers)
Activision Blizzard (NASDAQ: ATVI) owns a number of popular video game franchises that includes World of Warcraft, Diablo, and Call of Duty. But it’s a children’s game series launched last year that’s poised to become its next powerhouse franchise.
Skylanders: Spyro’s Adventure is an action-adventure game for the middle school set. The genius of this franchise is that it requires physical character figurines that are plugged into a “Portal of Power” in order for that character to show up in-game and become playable. The starter packs include the game, portal, and three figurines. Additional figurines are sold separately and there are more than 30 of them available.
Spyro’s Adventures came out in the latter part of last year. A sequel, Skylander Giants, is coming out on October 21 on most platforms and later in the year for the WiiU, itself a coveted holiday gift. Giants will work with the original characters but 24 updated versions will also become available, which come with special advancements. There are two new classes of characters, the large-scale Giants and the LightCore characters that glow onscreen and off, with each class containing eight character pieces. The Starter Pack, which includes the portal, will sell for about $75 or those with a portal can plunk down $60 for the Portal Owners Pack.
It’s predicted that Activision will have sold a total of nearly 70 million Skylander character pieces (aka toys) before the end of this year. There are also talks to expand the franchise into television cartoons or films.
ATVI is down 12% this year and is trading in the $11 range, compared to a 52-week range of $10.94 to $14.40. While console game usage is on the decline, ATVI made the right move by launching the truly unique Skylander franchise rather than pursuing a title on the Facebook platform, a route that competitors such as Electronic Arts decided to pursue only to mostly get lost in the crowd.
LynBetz has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Activision Blizzard. Motley Fool newsletter services recommend Activision Blizzard, Amazon.com, and LeapFrog Enterprises. 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.