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New Big Hugs Elmo Toy Heating Hasbro For The Holidays

By: Investor's Business Daily
Posted: 10/2/2013 5:57:00 PM
Referenced Stocks: HAS;JAKK;MAT

While it's only early October, it's not too early to decide what to get for kids this holiday season.Hasbro's ( HAS ) latest version of Sesame Street's Elmo toy is slated to be a top seller this year.

Dubbed the Big Hugs Elmo, the 22-inch plush toy talks, sings and helps kids learn. And of course, it gives children big hugs with its furry arms. The Big Hugs Elmo, which retails for about $59.99, recently made Toys "R" Us' 2013 Hot Toy List. The Toy Insider also had the Big Hugs Elmo on its Hot 20 List.

Needham's toy analyst Sean McGowan told Bloomberg Radio, "It's been a while since there's been a successful Elmo, so this is a no-brainer."

The first generation Elmo toy, Tickle Me Elmo, launched in 1996 and was a runaway hit. Shoppers fought in store aisles and trampled clerks to get their hands on one.

Based in Pawtucket, R.I., Hasbro is the second biggest company in IBD's Leisure-Toys/Games/Hobbies group. It's best known for its Nerf, G.I. Joe and Playskool toys. The company has a market cap of nearly $6.2 billion. El Segundo, Calif.-based rivalMattel ( MAT ) is the largest, with a market cap of $14.6 billion.

Hasbro has delivered higher earnings in recent years. Earnings ticked down in 2008, but grew by 3% to 24% over the next four years. It has a five-year Earnings Stability Factor of 8, signaling a steady stream of profits. Analysts polled by Thomson Reuters see its earnings rising 2% to $2.88 a share this year. But growth is expected to pick up to 11% in 2014.

The toymaker has ramped up its dividend each year since 2004. It last announced a dividend increase in February. Hasbro currently pays 40 cents a share each quarter or $1.60 a share on an annual basis.

Hasbro has a yield of about 3.4%, which is larger than that of the S&P 500. Its much smaller peerJakks Pacific ( JAKK ) has the highest yield in the group at around 6%.