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2 Toys & Games Stocks Set to Capitalize on Industry Growth
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The Zacks Toys-Games-Hobbies industry is expected to benefit from sustained demand for innovative toys, licensed products and collectibles. Toy manufacturers are focusing on popular entertainment franchises, strategic partnerships and product diversification to attract consumers across age groups. Rising interest in trading cards, collectible merchandise and interactive play is creating new growth avenues. E-commerce expansion and effective inventory management are also supporting industry prospects. However, inflationary pressures, elevated production costs and tariff-related uncertainties may weigh on margins. Industry participants like Hasbro, Inc. (HAS - Free Report) and JAKKS Pacific, Inc. (JAKK - Free Report) are well-positioned to capitalize on evolving consumer preferences through their strong brands, licensing capabilities and product innovation.
Industry Description
The Zacks Toys-Games-Hobbies industry comprises companies that design, manufacture and sell various games and toys. While traditional toymakers primarily focus on marketing and selling action figures, accessories, dolls, youth electronics, and arts and crafts, other industry players develop and market content and services on video game consoles, personal computers and mobiles. Some industry participants offer video game platforms, playing cards, Karuta and other products, as well as handheld and home console hardware systems and related software. Some companies develop and operate retail and online military simulation games and offer both single- and multiplayer games.
4 Trends Shaping the Future of the Zacks Toys-Games-Hobbies Industry
Licensed Franchises and Collectibles Drive Consumer Demand: Popular entertainment franchises, gaming properties and sports brands continue to create growth opportunities for toy manufacturers. Licensing partnerships enable companies to develop products around established characters and intellectual properties, attracting consumers across age groups. Action figures, dolls, trading cards and collectible merchandise benefit from strong brand recognition and fan engagement. Growing interest in hobby-oriented products and adult collectibles is also broadening the industry's consumer base, supporting product diversification and repeat purchases.
Product Innovation and Creative Play Support Growth: Toy manufacturers are increasingly focusing on innovative offerings that combine entertainment, creativity and educational value. STEM-based toys, robotics kits, construction sets and interactive learning products are appealing to families seeking engaging play experiences. Companies are also refreshing established brands with new designs, features and play formats to sustain consumer interest. Continued product development and portfolio expansion are likely to help manufacturers adapt to evolving preferences and strengthen demand.
E-commerce and Emerging Markets Offer Growth Opportunities: Expanding online retail channels are improving product accessibility and enabling toy manufacturers to reach wider consumer audiences. Digital platforms also help strengthen brand visibility and support changing shopping preferences. Emerging markets offer additional growth potential, backed by rising disposable incomes, expanding middle-class populations and increasing demand for branded toys. Broader distribution networks, localized product offerings and strategic partnerships are expected to help companies capitalize on these opportunities.
High Costs and Margin Pressures Remain a Concern: Toy manufacturers continue to face elevated production, labor, freight and raw material expenses. These pressures may weigh on profitability, particularly in competitive and price-sensitive product categories. Balancing attractive pricing with margin protection remains a key challenge. Companies are focusing on cost discipline, operational efficiencies, supply-chain optimization and effective inventory management to mitigate expense pressures and support earnings growth.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Toys-Games-Hobbies industry is grouped within the broader Zacks Consumer Discretionary Sector.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects.
The Zacks Toys-Games-Hobbies industry currently carries a Zacks Industry Rank #28, which places it in the top 11% of 247 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks for investors to consider, let us analyze the industry’s recent stock-market performance and valuation picture.
Industry Outperforms the S&P 500
The Zacks Toys-Games-Hobbies industry has outperformed the S&P 500 index in the past year. The industry has gained 43.1% over this period compared with the S&P 500’s rise of 12.4%. In the same time frame, the sector has declined 9%.
1-Year Price Performance
Industry's Current Valuation
Comparing the industry with the S&P 500 index based on forward 12-month price-to-earnings, which is a commonly used multiple for valuing the industry, we see that the industry is trading at 12.91X, lower than the S&P 500’s 18.55X and the sector’s 19.89X.
Over the past five years, the industry traded as high as 17.26X and as low as 9.63X, with the median being 13.04X, as the chart shows.
P/E (F12M)
2 Zacks Toy Stocks to Keep an Eye On
Hasbro: The company continues to benefit from strong MAGIC: The Gathering demand, successful releases, backlist sales and broader distribution. Rising player engagement and Universes Beyond partnerships support franchise growth, while Consumer Products benefits from entertainment-linked brands and licensing partnerships.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 58.7% in the past year. The company’s 2026 earnings are likely to witness a year-over-year increase of 20.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: HAS
JAKKS Pacific:The company is benefiting from strong Disney demand, Nintendo product momentum and a recovery in costumes. International expansion, growing private-label offerings and new collectible lines provide additional growth opportunities, while a stronger 2027 entertainment slate supports its product pipeline.
Shares of this Zacks Rank #2 (Buy) company have gained 103.1% in the past year. The company’s 2026 earnings are likely to witness a year-over-year increase of 52.5%.
View the Zacks #1 Rank List
Image: Bigstock
2 Toys & Games Stocks Set to Capitalize on Industry Growth
The Zacks Toys-Games-Hobbies industry is expected to benefit from sustained demand for innovative toys, licensed products and collectibles. Toy manufacturers are focusing on popular entertainment franchises, strategic partnerships and product diversification to attract consumers across age groups. Rising interest in trading cards, collectible merchandise and interactive play is creating new growth avenues. E-commerce expansion and effective inventory management are also supporting industry prospects. However, inflationary pressures, elevated production costs and tariff-related uncertainties may weigh on margins. Industry participants like Hasbro, Inc. (HAS - Free Report) and JAKKS Pacific, Inc. (JAKK - Free Report) are well-positioned to capitalize on evolving consumer preferences through their strong brands, licensing capabilities and product innovation.
Industry Description
The Zacks Toys-Games-Hobbies industry comprises companies that design, manufacture and sell various games and toys. While traditional toymakers primarily focus on marketing and selling action figures, accessories, dolls, youth electronics, and arts and crafts, other industry players develop and market content and services on video game consoles, personal computers and mobiles. Some industry participants offer video game platforms, playing cards, Karuta and other products, as well as handheld and home console hardware systems and related software. Some companies develop and operate retail and online military simulation games and offer both single- and multiplayer games.
4 Trends Shaping the Future of the Zacks Toys-Games-Hobbies Industry
Licensed Franchises and Collectibles Drive Consumer Demand: Popular entertainment franchises, gaming properties and sports brands continue to create growth opportunities for toy manufacturers. Licensing partnerships enable companies to develop products around established characters and intellectual properties, attracting consumers across age groups. Action figures, dolls, trading cards and collectible merchandise benefit from strong brand recognition and fan engagement. Growing interest in hobby-oriented products and adult collectibles is also broadening the industry's consumer base, supporting product diversification and repeat purchases.
Product Innovation and Creative Play Support Growth: Toy manufacturers are increasingly focusing on innovative offerings that combine entertainment, creativity and educational value. STEM-based toys, robotics kits, construction sets and interactive learning products are appealing to families seeking engaging play experiences. Companies are also refreshing established brands with new designs, features and play formats to sustain consumer interest. Continued product development and portfolio expansion are likely to help manufacturers adapt to evolving preferences and strengthen demand.
E-commerce and Emerging Markets Offer Growth Opportunities: Expanding online retail channels are improving product accessibility and enabling toy manufacturers to reach wider consumer audiences. Digital platforms also help strengthen brand visibility and support changing shopping preferences. Emerging markets offer additional growth potential, backed by rising disposable incomes, expanding middle-class populations and increasing demand for branded toys. Broader distribution networks, localized product offerings and strategic partnerships are expected to help companies capitalize on these opportunities.
High Costs and Margin Pressures Remain a Concern: Toy manufacturers continue to face elevated production, labor, freight and raw material expenses. These pressures may weigh on profitability, particularly in competitive and price-sensitive product categories. Balancing attractive pricing with margin protection remains a key challenge. Companies are focusing on cost discipline, operational efficiencies, supply-chain optimization and effective inventory management to mitigate expense pressures and support earnings growth.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Toys-Games-Hobbies industry is grouped within the broader Zacks Consumer Discretionary Sector.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects.
The Zacks Toys-Games-Hobbies industry currently carries a Zacks Industry Rank #28, which places it in the top 11% of 247 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks for investors to consider, let us analyze the industry’s recent stock-market performance and valuation picture.
Industry Outperforms the S&P 500
The Zacks Toys-Games-Hobbies industry has outperformed the S&P 500 index in the past year. The industry has gained 43.1% over this period compared with the S&P 500’s rise of 12.4%. In the same time frame, the sector has declined 9%.
1-Year Price Performance
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Industry's Current Valuation
Comparing the industry with the S&P 500 index based on forward 12-month price-to-earnings, which is a commonly used multiple for valuing the industry, we see that the industry is trading at 12.91X, lower than the S&P 500’s 18.55X and the sector’s 19.89X.
Over the past five years, the industry traded as high as 17.26X and as low as 9.63X, with the median being 13.04X, as the chart shows.
P/E (F12M)
.jpg)
2 Zacks Toy Stocks to Keep an Eye On
Hasbro: The company continues to benefit from strong MAGIC: The Gathering demand, successful releases, backlist sales and broader distribution. Rising player engagement and Universes Beyond partnerships support franchise growth, while Consumer Products benefits from entertainment-linked brands and licensing partnerships.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 58.7% in the past year. The company’s 2026 earnings are likely to witness a year-over-year increase of 20.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price & Consensus: HAS
JAKKS Pacific:The company is benefiting from strong Disney demand, Nintendo product momentum and a recovery in costumes. International expansion, growing private-label offerings and new collectible lines provide additional growth opportunities, while a stronger 2027 entertainment slate supports its product pipeline.
Shares of this Zacks Rank #2 (Buy) company have gained 103.1% in the past year. The company’s 2026 earnings are likely to witness a year-over-year increase of 52.5%.
Price & Consensus: JAKK