Will Mattel Stock Continue to Build Momentum in the Summer?

Mattel (NYSE:MAT) is one of the largest toy manufacturer and marketer in the world. Shares were up 2.34% in early afternoon trading on June 18. The stock has climbed 17.6% in 2019 so far.

Mattel put together a strong quarter in Q1 2019. Reported operating loss increased to $131 million in the quarter compared to an operating loss of $276.6 million in the prior year.

Net sales were up 1% in constant currency to $689.2 million. Barbie, Hot Wheels, and Action Figures/Building Sets/Game gross sales saw the most encouraging improvement from the previous year.

Mattel is still on a recovery track, which leaves it vulnerable to setbacks in a shaky economic environment. Fortunately, consumer spending has remained one of the strongest points in the North American economy over the past two years.

United States retail sales in April showed 0.5% growth. Still, this missed estimates of 0.7% growth for the month. Consumer spending constitutes two thirds of U.S. Gross Domestic Product, so robust growth is encouraging in the face of other headwinds like trade and industrial output.

MGA Entertainment, a privately-held rival toymaker, has made repeated efforts to acquire Mattel. The latter has consistently rejected these offers, putting faith in its management to chart forward with its recovery path. Shares had an RSI of 61 as of this writing, which puts Mattel close to technically oversold territory before the summer kicks off.