Gary Jacobson, Kidder, Peabody, likes Mattel (MAT, NYSE around $20).
"Unlike most of the sector, industry leader Mattel has not been disappointing. Its success, we believe, is a result of its diversity. The current industry environment -- with its focus on basic toy lines and promotional products -- is creating opportunities for large, diversified companies such as Mattel . . . The company continues to generate a lot of cash. Our full-year estimate remains $2.40 a share. We continue to rate the stock a buy."
BI Research, Redding, Conn., favors Tyco Toys (TTOY, OTC around $10).
"We have lowered our earnings estimates for the company due to the acquisitions of toy makers Nasta and Playtime. These new operations . . . should be profitable next year. Meanwhile, the decline in Tyco Toys is ludicrous. We think it is creating a great buying opportunity. We look for overall corporate earnings of $1.70 a share this year and $2.40 a share next year. At current prices, the stock trades at an irresistible P/E of only 5. We rate the stock a buy."