Should i buy leapfrog stock

In particular, the LeapPad 2's rugged construction and kid-friendly design that protected them from a full-frontal assault by the Internet led me to think LeapFrog would outpace its rivals last November by appealing to their parents. It also won the "People's Choice Toy of the Year" award. Hollywood Walk of Fame In contrast, Hasbro's business has become highly dependent over the years on the success of movies based on the characters it licenses, such as the Transformers franchise, which made billions of dollars at the box office, and generated a huge influx of cash into the toymaker's coffers through toys, tie-ins, and cartoons.

But when Hasbro doesn't have a strong lineup of movies to look forward to, to prop up its top-line numbers, business typically plunges. It may very well have been the success of Transformers that led Hasbro to get into the movie-making business itself, though Marvel Entertainment's ability to mint gold from its deep character portfolio prior to being acquired by Disney may have lured it in, too. Yet, after witnessing blunders at the box office like Battleship, the jury is still out on whether Hasbro can replicate that model.

For its part Mattel focuses more on traditional toys, led by the ever-youthful Barbie, Matchbox cars, and Fisher-Price toddler toys division. Plugged in LeapFrog is cashing in on what Hasbro has called the "children getting older younger " phenomenon.

The industry analysts at Nielsen conducted a survey before Christmas, and found that the most desired gift of 6 to 12 year olds was an iPad. In fact, the Touch, mini, and iPhone rounded out four of the top five gifts on the list. By keying into this trend of more adult products for kids while maintaining the kid-centric design, LeapFrog has the ability to pull further away from the competition in terms of profitability.

Valuation-wise, too. Both Hasbro and Mattel trade at 13 times estimates, while LeapFrog goes off at 11 times estimates; but with its enterprise value trading at less than 10 times free cash flow, it becomes a real bargain basement stock. But let me know in the comments box below whether you agree that LeapFrog deserves to be on the playground of your portfolio. On Nov. If you still hold shares in LeapFrog Enterprises, Inc. LeapFrog has actually been in trouble for two years now.

The maker of educational toys for children started seeing increased competition for its tablet in the summer of LF missed Wall Street estimates for five quarters in a row, clobbered by a host of problems. Among the issues plaguing LeapFrog — and by extension, LF stock — are a decline in consumer demand, particularly for its flagship tablets; lower demand for accessories and cartridges; a glut of inventory at the retail level; the delayed launch of its LeapTV game system; and lower-than-expected LeapReader sales.

Why those shareholders held on through this debacle is another matter. LF stock peaked in July and has been in decline ever since. Retired: What Now?

Personal Finance. Credit Cards. About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures. Search Search:. Oct 31, at PM. Yes, that's a long time with more than 20, bylines over those 24 years.

He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception.

Follow market. Report , and other large name-brand content providers probably won't feel a need to pay a premium licensing fee to LeapFrog to use the LeapFrog name on an Android or Apple app.

Also, the average selling price of content within the LeapFrog ecosystem is much higher. LeapFrog will have to compete on quality and price in a world where the freemium model is gaining ground. Despite the headwinds and coming storm, the company is still profitable, which allows management options that it might not otherwise have.

It can continue to sell toys and products other than proprietary tablet-like devices. Amazon's Kindle is based on Android with Amazon's own "icing" on top. A device using the same model may slow the revenue decay. Not everyone agrees with my dire forecast. If I was to name three people that I would not want to bet against, Michael Milken would be on the list.

He also happens to be a exceptionally large LeapFrog shareholder. I have followed Milken for more than 20 years, and I know his Milken Family Foundation donates to education causes. I believe his investment has more to do with his overall belief in providing educational opportunities for children than receiving a financial return. LeapFrog may also have one last trick up its sleeve for investors.

At the right price, it becomes an attractive asset for a larger toy or similar company. A takeover price is a downward-moving target, though.