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toy demand ramping up

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    Sector Snap: Toy makers
    Monday November 3, 2:37 pm ET

    Analyst: Toy maker shares are as volatile as broader market even as holiday demand ramps up

    NEW YORK (AP) -- An analyst said Monday he is beginning to see a ramp up in demand for toys ahead of the holidays, but added that toy stocks so far have been as volatile as the rest of the market.
    Needham & Co. analyst Sean McGowan said in a note to investors that at the midpoint of the September to December holiday season, traffic in toy stores and toy aisles is "significantly better" than it was earlier in October.

    Price competition is intensifying, he said, "but is not yet at manic levels."

    Toy company share prices have been one casualty of the broader market's volatility. Typically they perform better than the broader market between Sept. 1 and late November each year, but this year the stocks have not followed this pattern, McGowan wrote.

    "Toy stocks plunged in October," McGowan noted. "While the drop in October has been more or less in line with broader measures, toy stocks in October typically benefit from increased shipping, greater advertising, the publication of 'Hot Toys' lists, product previews for the following year, investors' conferences and the advent of the all-important holiday period."

    As a result of their cheap valuations, toy-company stocks are great values, according to McGowan. He rates Hasbro Inc. "Buy," Mattel Inc. "Strong Buy," Jakks Pacific Inc. "Buy," and RC2 Corp. "Hold."

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