Top Picks 2017: Mattel

01/18/2017 7:00 am EST


Crista Huff

Editor, Cabot Undervalued Stocks Advisor

Our Top Pick for conservative investors for the coming year is a company that went through a management overhaul in 2015, leaving investors uncertain about the company's future, observes Crista Huff, editor of Cabot Undervalued Stocks Advisor.

Mattel (MAT) markets toys globally under the brand names Mattel, Fisher-Price, RoseArt, Barbie, AmericanGirl and many more, including strategic relationships with Disney (DIS), Google (GOOGL) and YouTube.

As a result of its prior overhaul, the stock got left in the dust. Consumer goods stocks were additionally tossed aside during the post-election stock market run-up.

That gives investors a buying opportunity in the sector's undervalued growth stocks, including MAT.

Mattel's earnings per share, which will finish 2016 with weak 1-2% growth (December year-end), are expected to grow 38% in 2017!

This mid-cap stock's 2017 price/earnings ratio is 16, and the dividend yield is a huge 5.4%. Mattel typically increases the dividend about once per year.

Institutional investors, who move the markets, are going to sit up and take notice of the coming profit bounty at Mattel.

MAT traded sideways throughout 2016, between $28 and $34, forming a healthy base from which to launch upward.

Buy MAT now while the price is still low. Traders can jump out near $34 with 20% profit, and longer-term investors can hold on for additional capital gains.

The stock traded as high as $48 in December 2013, so that's your maximum 2017 price target, giving new investors a potential 65% total return.

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