Find out how you can cash in on the staggering amount that parents spend on bringing up their children.
The cost of bringing up a child from birth to when he or she leaves university is an astounding £164,000. And between the ages of one to eleven parents can expect to spend some £92,000 or 56% of the total estimated cost of raising a child. So how can investors cash in on the staggering amount that parents splash out on their children?
Mothercare
(LSE: MTC)
is probably a good place to start since it is often a destination of choice for most new parents. For a number of years Mothercare has been hampered by poor stock control that has hurt top line sales. However, thanks to improved warehouse management the company has returned to growth, and profits have followed suit. Turnover for 2007 is expected at £500m, which means the debt-free company is valued at a modest 0.5 times sales.
General retailer Woolworths
(LSE: WLW)
is another player in the kiddies market. Last month, the "pick and mix" specialist said it plans to become the leading retailer for children's toys and clothing. The company, which reported a first-half loss of £65m, said it will roll out 92 Ladybird "shop within shops" children's clothing outlets by Christmas.
Entertainment Rights
(LSE: ERT)
is the largest supplier of children's and family programming in the UK. The media company, which owns the rights to Postman Pat and Rupert the Bear, slipped into a loss in the first six months. However, the company, which also owns Basil Brush, said the poor performance in the first six months may be made up in the second half thanks to a record number of programmes in production.
Turning to education, Creative Education
(LSE: CEC)
operates 29 nurseries of which 20 have occupancy rates above 60%. However, Creative Education is loss-making, reflecting the competitiveness of the fragmented childcare sector. That said, it may benefit from organic growth and sector consolidation.
NordAnglia Education
(LSE: NAE)
is another crèche operator, though it is involved in other education related businesses, too. Its International Schools division has operations in Shanghai, and there are plans to open a junior school in South Korea next year.
Bananas in Pyjamas, may be another way to gain exposure to the children's market. Entertainment minnow Maverick Entertainment
(LSE: MVK)
, has published several books featuring the characters and it also owns the rights to Muffin the Mule and Snailsbury Tales. A recent distribution deal for the latter properties may help the company achieve its objective of returning to profit.
So there it is -- a few companies that are exposed to the children's market. But which is the best?
As I see it Woolworths, which has been a serial disappointer over the years, looks to have at long last identified a useful niche on the crowded high street. For many years, the general retailer has suffered from an identity crisis -- no one really knew why it was there. But focussing on children's toys and clothes may provide the catalyst for a turnaround. Mind you, the shares, which are valued on a P/E of 19 aren't cheap. But a price-to-sales ration of 0.2 is, and so too is a yield of 5.1%.
> Six Of The Best | Education, Education, Education
