Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

LeapFrog Enterprises, Inc. (LF), Hasbro, Inc. (HAS), Mattel, Inc. (MAT): Making Moms Happy Will Make You Richer

Page 1 of 2

Moms are the guiltiest consumers out there, worrying about kids’ safety, health, and education. Companies seeking moms’ strong purchasing power mistakenly believe that they are the easiest demographic to sell to. According to Marketing Profs they are the toughest consumer group to sell.

Marketing Profs explains that this is partly due to a miasma of low level guilt enveloping most moms — am I doing enough for their education, etc. Also, the Millennial moms are the most tech-savvy and expect to research their purchases online. Toy companies are the most exposed to moms’ purchasing decisions.

LeapFrog Enterprises, Inc. (NYSE:LF)

Who should benefit?
Of these LeapFrog Enterprises, Inc. (NYSE:LF) should be best poised to profit. As an educational toy maker it already has the advantage of alleviating mom guilt. I say should because their new LeapPad Ultra, a $150 tablet that only allows access to LeapFrog Enterprises, Inc. (NYSE:LF)’s 800 proprietary games and LeapFrog Enterprises, Inc. (NYSE:LF) vetted sites, was savaged in a recent BMO Capital downgrade.

BMO Capital thinks the Ultra is overhyped and won’t be one of the must buys this holiday season.They cut their stock price target from $15 to $10. That sucker punched the stock, taking it down 7%.

The company’s products have been awarded 80 National Parenting Center Seal of Approval distinctions, with six awarded this August, including one for the new LeapPad Ultra.Their products also assuage moms’ fears about exposure to inappropriate content and time wasted on non-educational pursuits. The Ultra now offers Wi-Fi and safe peer to peer gaming.

Despite the downgrade, there’s still a lot to like about LeapFrog Enterprises, Inc. (NYSE:LF): no debt, a large insider hold of 14%, return-on-equity of 35.67%, and a price to sales of .96. Naysayers abound with a 24.30%, and growing, short interest. However, insiders have been buying. Director Owen Rissman bought 25,000 shares at $9.10 on September 3.

This small cap, ~$602.30 million, compares favorably with much larger competitors Hasbro, Inc. (NASDAQ:HAS), with a market cap of $6.10 billion, and Mattel, Inc. (NASDAQ:MAT), with a market cap of $14.14 billion. Analysts give LeapFrog Enterprises, Inc. (NYSE:LF) a 17.50% earnings-per-share growth rate, as opposed to Hasbro, Inc. (NASDAQ:HAS)’s 7.70% and Mattel, Inc. (NASDAQ:MAT)’s 7.95%.

Niche electronic learning toys that include e-readers and touch screen developmental toys have earned LeapFrog a trailing price-earnings-growth ratio of .77, lower than Hasbro, Inc. (NASDAQ:HAS)’s 2.10 and Mattel, Inc. (NASDAQ:MAT)’s 1.91. However, it’s online word-of-mouth that attracts moms to buy, with 84% of moms checking online before they buy according to PunchTab 2013. And when moms search for LeapPad Ultra they get four star Amazon reviews and the site, both recommending the device.

When Mom’s not happy, ain’t nobody happy
Investors should love LeapFrog Enterprises, Inc. (NYSE:LF)’s razor and blade model.The Ultra only comes with 11 apps preloaded; the 789 others available are sold separately. Music to investors’ ears.

Its proprietary apps are downloadable. However, cartridges, although relatively pricey at $25, are still more convenient. LeapFrog CEO John Barbour said,”When mom is in Wal-Mart or Target, it’s actually easier for her to pick up a cartridge and use it, than it is to go and download. Any time mom has to spend time being the head of IT at home, she’s very unhappy.” Come Christmas morning (or winter holiday of your choice) Mom does not want to be downloading apps for antsy children.

Toy industry competition is fierce. As the Mattel 10-K notes, competitors also include VTech, Lego, and Bandai, which also make educational toys. Even Amazon has got into the act with a kid-friendly Free Time control for the Kindle Fire, although by no means is it an educational toy.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!