Finding the next great value play in a heap of companies which have been hit hard in 2017 can be a difficult task. With major disruption in a number of key industries taking headline news and focus away from traditional retail-dependent companies, many value investors are now taking a deeper look at just how deep a discount some of these forgotten companies are offering in today’s marketplace, and just how much long-term value could be gleaned from taking a long-term approach to companies such as Mattel, Inc. (NASDAQ:MAT).
In addition to the obvious (and perhaps over-cited) intrusion of e-commerce into the traditional toy supply chain/business model, Mattel has had to deal with another huge blow in 2017, namely, the bankruptcy of Toys R’ Us. With key sales and distribution channels being squeezed, investors concerned about the sector in general have largely thrown out companies such as Mattel from portfolios, despite turnaround efforts that may wield impressive results in the years to come.
With a new management team in place, analysts have begun to assess the turnaround value of Mattel as a speculative buy in a market which has seen the company’s share price cut by approximately two-thirds in just the past four years.
To return to its former glory would imply a potential upside of 200%, although the reality of how much upside actually exists is a topic to be debated.
I’m personally on the sidelines on this play, however in terms of deep value, a strong speculative argument could be made here for Mattel.
Invest wisely, my friends.
