More Upside In Mattel

A couple of days ago, I read an article on Investorplace about Mattel, titled,

Here’s Why $15 Looks Like A Top In Mattel Stock.

Overall, the pathway to restored profitability and top-line growth is gaining visibility. This boost in visibility explains the big pop in hugely beaten up MAT stock.

But, this post-earnings pop is overdone. At current levels, a Mattel turnaround over the next several years is already priced in. The stock is overbought and fully valued, and the price tag doesn’t seem to price in enough execution risk.

But, in the big picture, this was a $9 stock at the beginning of the year. Now, it’s up above $15 (about the price of its iconic Barbie doll). That’s a 65%-plus rally in just over two months. Plus, revenue growth is still negative, gross margins are still well off their highs, the company still isn’t profitable, headwinds remain in the toy industry, and there’s still a ton of debt on the balance sheet.

In recent weeks, I have wrote about Mattel on two separate post.

Mattel Hot, Hasbro Not

Unusual Options Activity In Mattel

In 2018, Mattel’s stock declined about 33% in 2018. However, investors are upbeat about the company in 2019. So upbeat that the Smart Money is buying up a tons of the February 8th, $12 – $13 strike call options before the company announces earnings on February 7th.

The author of the article makes many compelling points, but the chart suggests there is more upside for Mattel’s stock price.  The monthly chart suggests price can another 30-40%, with a target at $20, right before the monthly demand at $22.50.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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