Carburton Street, London -- With the festive season almost upon us, thoughts turn to children's toys and gifts. And with so much money being spent on presents every year, investors should consider those companies that regularly cash in on Christmas.
One of the many beneficiaries of Harry Potter this Christmas will be Bloomsbury Publishing (LSE: BMY), owner of the UK publishing rights to the JK Rowling books. During September, Bloomsbury expected a "very positive" outcome over the Christmas period. That confidence no doubt explains why forecasters are expecting Bloomsbury's earnings to grow 37% this year. However, at 828p, the shares stand on a price to earnings (P/E) ratio of 25. At the moment, there's a fair few other investors who've already fallen under Master Potter's spell.
Another kiddies' favourite is Bob The Builder. He's owned by HIT Entertainment (LSE: HTE), the company also behind Barney and Pingu. When publishing its full year results in October, HIT stated that the next few years would see "dynamic growth" in its business. With the help of acquisitions, profits are expected to grow by 110% in 2002 and by 39% the year after. With the shares priced at 349p, the resulting P/E is a whopping 35. Like most good builders, Bob doesn't come cheap.
Then there's Gullane Entertainment (LSE: GUL), owner of Thomas The Tank Engine, Sooty and the Guinness Book Of Records. At last month's AGM, the group remarked on the continuing "good progress" in meeting its full year targets. With annual earnings growth of 26% and 19% expected over the next two years, at 513p, Gullane's shares sit on a reasonable forward P/E of 20.
But for those looking for possible bargains this Christmas, it could pay to go 'back to basics'. Hornby (LSE: HRN), manufacturer of the eponymous train sets and Scalextric racing cars, last month informed of a 50% recovery in interim profits. Furthermore, the company indicated that it should benefit from a "surge in demand" for its products this Christmas. However, brokers somewhat cautiously expect Hornby's profits to remain flat this year and next. At 270p, the shares stand on a prospective P/E of just 12. They also offer a dividend yield of 4.4%, too.
Of the four companies highlighted, it looks like Hornby would be the investor's best bet. If the traditional toy firm experiences a happy festive season and continues its revival, then there's every chance of Hornby shareholders cashing in on Christmas this year.
More: The Stunning Value Of Scalextric | Bloomsbury Publishing discussion board | HIT Entertainment discussion board | Gullane Entertainment discussion board
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