Is Spin Master a Bargain Buy?

Retail stocks are taking a bit hit during the COVID-19 pandemic. Those that survive, however, could generate terrific returns for investors who invest in them today. One stock that could fall into that category is Spin Master Corp (TSX:TOY). The toy manufacturer has lost close to 60% of its share price this year.

The company released its first-quarter results of 2020 on May 6, and while they weren’t awful, Spin Master noted that COVID-19 has impacted its supply chain in Asia.

The company’s sales were down 4.9% from the prior-year period. It reported a net loss of $26.7 million U.S., which was worse than the $20.9-million U.S. loss that Spin Master incurred a year ago.

But the good news for investors is that the company’s in a solid financial position. It reported cash of $424 million U.S. as of March 31. And during the first three months of the year, Spin Master used up just $8.8 million U.S. in cash to fund its day-to-day operating activities.

With cities around the world starting to loosen restrictions and retailers starting to come back online, there’s hope that Spin Master may be able to bounce back sooner rather than later. And with kids staying home more, there could be greater need for toy purchases and ways for parents to keep their kids entertained indoors.

At more than $17, the stock’s not near its 52-week low of $9.73, but it’s also far from the more than $40 a share it was trading at this time last year. Spin Master could be a good stock to buy and hang on to. Its finances are in good shape and demand for its toys may continue to be strong.