MAT and HAS are toys designer and manufactures, market and sell toys in North America, US market and Europe
Recently has suffered significant price lose due to massive toys recall.
Why both are good for middle term turn around play?
1) The price correction is over down. MAT lost 30% of it's stock value from the top, and HAS lost 21%.
2) The problems that caused massive recall are relatively simple. Most caused by paint used on toys, which contain excessive lead that could harm children's health. It is farely easy to fix with limited cost.
3) Both companies have very good growth trend prior recall. Even with beaten down price, both stocks' YOT are still positive and outperform market. Both company have low P/E and relatively high growth. The recent events has create a good buying opportunity for middle term play.
4) It close to the holiday season again which is the strongest season for both stocks. If both compaies can fix the problem quickly, it still have time to catch the train for holiday season.
5) China also vow to resolve these problems. Massive recall of toys and other goods has damaged the China's image as second largest export country in the world. Although the problems are not all China's fault, it is a critical issue to resolve for China to maintain its strenth in export goods and products and move forward. Almost 1/3 of GDP driven from
export.. China has launched a four months long "special battle" championed by vice Premier Wu Yi - famous "Iron Lady" Fight for survive, fight for quality and fight for safty. It will help to accelerate the process.
6) From TA point of view, MAT just break 3 months down trend and stay above 10 and 20 day moving average with large volume, HAS has a solid double bottom recenly.
MAT target: 26.5 stop 21
HAS target 31.4 stop 26
MAT close at $22.9 up 4.59% and HAS close at 27.93 up 1.66%