What if you could own a few slivers of the gold coins flowing from sales of the popular game Dungeons & Dragons? Do you know that the publishers, Wizards of the Coast, is a subsidiary of Hasbro? That is right, Hasbro owns a treasure trove of intellectual property games like D&D, Magic the Gathering and much more!
Therefore, why not own a slice of Christmas and other toy/gaming sales?
I am generally trying to limit exposure to individual stocks as time goes on and pour more funds into select ETF buckets, but I occasionally will take some of the higher risk funds and invest in companies I believe will do well over time and return value to shareholders. One such company that appears to be in a buy range is Hasbro.
You may know that I invest in Hasbro products as collectibles (i.e. Magic the Gathering cards/boxes, etc.); and I highly enjoy Hasbro property Dungeons & Dragons. In general, I see the power of games to create memories, teach, entertain and bring people together. But what about owning some of the future profits of this gaming giant?
- The company has posted excellent financial results, and I think the upgrade to the next version of Dungeons & Dragons offers growth opportunities.
- Due to the broader market doldrums, the stock is now inexpensive, and the well-covered dividend yield is quite high. The last time the shares traded at current PEs, they did well.
The financial performance this year was quite good. Specifically, while revenue has increased by only about 2.7% during the first six months of 2022 relative to the same period in 2021, net earnings have exploded higher by about 118%. Specifically, royalties, and advertising expenses are down by 9.2%, and 16.3% respectively. Other expenses, like product development and selling and distribution were down only slightly.
My investment thesis is also based on my extensive experience in gaming and collecting. Essentially I believe Hasbro to be recession proof. In fact, it may even thrive during a recession as people seek inexpensive entertainment and social options. You see, games like Dungeon’s and Dragons can go both ways. They can sell the products to every income level. In fact, it is quite possible to play the game for almost no money down, but the company can also sell to the high end client luxury gaming products.
Creative game play will always be in fashion. And Hasbro appears to continue to position itself for success. For me personally, I am rolling the dice and of course wishing for that “nat 20” return.