Toy Industry 2019: Hot Toys and Competition

The calendar gives 2019 a shorter holiday season than usual, but the hottest toys are still flying off the shelves.

In this episode of Motley Fool Money, host Chris Hill and analysts Jason Moser, Emily Flippen, and Ron Gross discuss some of the biggest recent business news. Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) founders Larry Page and Sergey Brin step down from their roles at the company, but aren't leaving completely. Constellation Brands' (NYSE:STZ) acquisition of Ballast Point looks a lot less appealing after the sell-off. Ulta Beauty puts up a mixed bag of an earnings report, but the market seems to like it. Plus, updates from United Airlines (NASDAQ:UAL), Expedia (NASDAQ:EXPE), Zoom (NASDAQ:ZM), and Five Below (NASDAQ:FIVE); and, the analysts share some stocks on their radar.

Stay tuned for a chat with Jackie Breyer of The Toy Book and The Toy Insider about toys -- the hottest trends this year, how toy makers are getting a little more high-tech, how the competitive landscape has shifted, and more.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

Editor's note: In the podcast, it's stated that: "Adobe obviously acquired, I believe it was HelloSign, and now they've turned it into Adobe Sign." HelloSign was not acquired by Adobe; the Fool regrets the error.

This video was recorded on Dec. 6, 2019.

Chris Hill: We begin with the ever-spinning revolving door to the corner office. A week of CEO departures was highlighted by one of the biggest companies in the public markets. Alphabet co-founder Larry Page is stepping down as CEO and will be replaced by Sundar Pichai, who has been running the show at Alphabet's most important division -- that's Google. Sergey Brin, Alphabet's other co-founder, is stepping down as president. Both Page and Brin are going to stay on the board. Jason, Pichai is the right person for the job. This is as smooth a transition as you could want if you're a shareholder. I'm still surprised by how quiet all of this has been, given the size of the company.

Jason Moser: Yeah. I think it's probably been quiet essentially because the bottom line is, I think, for Alphabet shareholders, this is a good move. I mean, this is good news. Succession plans, as we know, are always a very big question mark, particularly as a business gets closer and closer to its leadership aging out. They're not necessarily aging out in this case, but I think they are off to do bigger and better things, perhaps, with their lives, as opposed to just looking after the day-to-day at the company. So I think we saw the market react positively to the news. And I think a lot of that has to do with the fact that we now have more certainty in regard to Alphabet's future and leadership.

Pichai, as you mentioned, is the right man for the job. And let's face it, I mean, he's been with the company now for around five years. Shareholders have benefited greatly from his leadership. Shares have doubled over that course of time. He's grown revenue at an annualized rate of 20% over that time.

There are all sorts of opinions out there as to why the time is now that this is happening is, are there political motives, are Page and Brin trying to avoid maybe being thrown into the spotlight with all of these regulation concerns. That, I guess, we could deliberate over the course of 2020. But for now, as a shareholder in Alphabet, I'm OK with this news.

Emily Flippen: Yeah, Page and Brin have done a lot for Alphabet in terms of side projects, if you will, investments into new initiatives. What's really interesting about Pichai is -- some people have speculated this -- that he's going to focus more on the core businesses. We've said it on the show before that YouTube is probably one of those things that Alphabet has really not monetized to its full potential. And so I wouldn't be surprised to see them more focused on its core search business, plus, hopefully, maybe some change regarding the way that YouTube is run within Alphabet.

Ron Gross: Yeah, I think this is an acknowledgement that Google primarily is the business. It's a somewhat conservative take on the business, de-emphasizing some of the potential home runs in favor of the incredible cash cow that Google is. I've got an idea -- how about we call the company Google?

Hill: Well, it really does seem like a move back toward that because of how important Google is to the business of Alphabet. Also, we're talking about Pichai. Ruth Porat, the CFO, is still there. The business is in very good hands. But Page and Brin were as big of champions of the Other Bets the business was making as anybody, and it wouldn't surprise me if in 12 to 24 months, some of those Other Bets just get completely defunded.

Moser: I think it's fair to say this is probably an implicit admission that the Alphabet structure hasn't taken off, perhaps, like they thought it would have. I mean, yes, this is a Google story. The name of the company, for all intents and purposes, really should still be just Google. But with that said, this certainly is a company that's not thinking over the course of quarters. I mean, they're thinking over the course of decades, really. And you have to admire that, given where they stand today with Pichai, with Porat. I mean, I really do feel good about the leadership they have in place to keep this business going forward.

And it's worth nothing, too, Page and Brin will still be a big part of this company. They're just not going to be doing it from the positions they held.

Hill: United Airlines also getting a new CEO. Oscar Munoz is stepping back. Will remain as executive chairman. Scott Kirby taking the corner office at United. Ron, you think this is a good move?

Gross: Yeah. Kudos to Munoz for having a great tenure there. The stock up about 56% since he took the reins, which is significantly outperforming the New York Stock Exchange Airline Index. But, a lot of the initiatives were actually led by Kirby. A lot of the aggressive growth strategy that has turned United around were led by Mr. Kirby. So, if you're a shareholder, I think you're pretty excited about this succession. It makes perfect sense to have him just elevated to the top.

Flippen: Yeah, and it's not surprising at all. Munoz took Kirby on in the midst of United's transformation, when they were struggling, both losing ground to American Airlines, which Kirby came from, and also struggling with things like that horrible incident where they were dragging doctors off of planes. The turnaround was much needed, but the bar was low when Kirby came on for United.

Gross: Yeah. Let's not forget -- three months after he took the reins, he had a heart attack, a heart transplant, and he went on to lead this company to a pretty nice turnaround. Now, I think, it continues under Kirby.

Hill: Anyone looking to be the CEO of Expedia can apply to chairman Barry Diller. Mark Okerstrom, the former CEO, and chief financial officer Alan Pickerill, resigned this week. Jason, add them to the list of people who went up against Barry Diller and lost.

Moser: You don't cross Barry Diller. He knows people and stuff and has a lot of resources and has his hand in a lot of cookie jars. Yeah, I mean, it's nice to see, at least, CEOs being removed for underperformance, right?

Hill: Yeah. It's refreshing to hear there's nothing untoward with another employee. This is just, "You're not getting the job done and you have to go."

Moser: And that's fair. I mean, if you look at Expedia's financials, revenue growth has slowed. You have to wonder how they're going to continue to compete with booking.com, which is obviously the behemoth in the space. We saw a lot of those same types of red flags market-wise with TripAdvisor's most recent announcement. And you can't forget, either, the role that Google plays here in this space with their search engine. I mean, search really is just an important part of everything that goes on in virtually everything that we do, and travel is no exception. So, yeah, whoever steps into that leadership position with Expedia definitely has their work cut out for him.

Gross: Cautionary tale for United, because back in the day, the succession plan at Expedia looked perfectly in line when the other CEO went to run Uber. Not everything works out. You can't run on your laurels, you have to perform.

Moser: You know what I noticed? Chelsea Clinton is an independent director on Expedia's board. Given her age, still young, obviously very intelligent, you have to wonder if someone like that doesn't have professional aspirations, at some point, to become a CEO at some time or another. I just noticed that, and the ideas started running around in my head.

Hill: Zoom Video is a growth company and Zoom's third quarter report showed that growth is slowing. Shares of Zoom down 10% on Friday, Emily.

Flippen: That's misleading, "Growth is slowing." Do you know how much their revenue growth was last quarter?

Moser: A lot?

Flippen: 85%. [laughs] "Growth is slowing." Yes, it's slowed down from 96% last quarter and 103% the quarter before that. So, yes --

Hill: I didn't say it was bad! I just said it was slowing!

Flippen: [laughs] Growth is definitely slowing, and the market, man, they have hammered them for it. But, look, they're still growing at 85%. That's top line growth. And they're a profitable company, which is really saying something, given the market that we're in today. So, I understand the concern about slowing growth, but you also have to realize that no company is going to grow at triple digits forever. And we just need to make sure that valuations are in line with new expectations for growth. That's what we're seeing happen today for Zoom. Stock's down largely because it was trading at something like 38X sales beforehand. Really, clearly, a very frothy valuation, but a strong business, and a business that admittedly is slowing down a little bit, but it's still growing significantly. Ultimately, it's just an issue of valuation, not really an issue in the business here.

Gross: I want to note that you use the word valuation three times, and I'm impressed. And that is what it's all about, because if they need to grow at 95% to support the stock price, and they're growing at 85% or less, the stock deserves to come down. And that'll happen every time.

Hill: You're so happy to have another value investor in the room.

Flippen: [laughs] Hey, hey, don't go that far.

Hill: Real quick before we move off of Zoom, the stock is basically trading where it was when it IPO-ed in April of 2018. Safe to assume the valuation is at least a little bit more reasonable now?

Flippen: Yeah, I think it's definitely a little bit more reasonable right now. I think the bigger concern is that people don't know how big the market for Zoom could be. So, its ability to continue to grow significantly is largely going to be dependent upon their ability to penetrate a largely unknown and untapped market. You have a hard time when you look to value -- Ron -- a company like Zoom.

Moser: I will say, I was down at Wofford College a couple weeks ago speaking, and it came to light that they're big fans of Zoom there as well. It got me thinking that there is a tremendous opportunity in the education space, higher education all the way down, I think, for companies like Zoom. It was nice to hear that they had such a positive review there.

Hill: Ulta Beauty put up mixed results in the third quarter, but someone must have liked what they saw because shares of Ulta Beauty were up 13% on Friday, Ron.

Gross: Beat expectations after a really tough earnings report last quarter, and the stock just got slammed. This time around, pretty good. Net sales up almost 8%. Comp sales up 3%. Driven by both transaction growth of 2% and almost a 1% growth in average ticket. Nice to see both of those things growing. Company has really been capitalizing on this demand for celebrity-led beauty brands, whether it's folks like Kylie Jenner, Jennifer Lopez, YouTuber James Charles, who I've never heard of. I don't know if you guys have.

The top line looks pretty good here. Gross margins widened, I like that as well. But operating expenses were up due to investments in growth initiatives. Labor costs higher. We're seeing that across the board at lots of retailers. So, as a result, net income was actually down slightly at 1%. Earnings per share faring a little better, up 3%, but that was solely because of share buybacks.

Flippen: I'm not nearly as entrenched in the beauty space as a 25-year-old girl should be, but I do know enough to know that the beauty market, especially as it applies to makeup, is being so largely driven by Google's YouTube, again. Actually, you mentioned a little bit the celebrity agreements they have there. Those are so vital. It's, honestly, a little bit of a harder business for Ulta now because there's so much direct-to-consumer availability for these celebrities to get their products out to their watchers, and that's driving a lot of purchases. It's taking away business from Ulta unless they have those partnerships in place, which hurts their margin. So it's a hard business to make work. I'm impressed that they're not slowing down faster.

Hill: Shares of DocuSign (NASDAQ:DOCU) hitting a new high on Friday after strong third quarter results. Revenue came in higher than expected for the electronic signature company. Jason, if you like traditional profits, DocuSign probably is not for you yet. But, DocuSign is getting it done.

Moser: Listen, as a shareholder in DocuSign, I'm feeling pretty good about today. Listen, when I think of management teams that are executing beyond their aspirations, DocuSign really is one that comes to mind. There was a blip in the middle of the year, if you recall, where the stock got hit on buildings concerns. But that really actually was a great example of a knee jerk reaction that provided investors an opportunity, because, if you remember, shares dropped all the way down to $48 and change in that time. But really, like you said, the business is accelerating. Revenue growth is impressive. They hit the upper end of the target for billings this quarter with growth of 36% there. Raised guidance for billings and revenue for the full year.

I think you want to look at a business like this and figure out what they're doing to leverage their core competency. With DocuSign, that's e-signature, right? So, they've done a very good job in taking that core competency in e-signature and building out this thing called the agreement cloud, which is a suite of more than a dozen offerings and hundreds of integrations that help companies, enterprises, individuals, manage the life of their contracts. And contracts, as we know, are just a big part of business. Big opportunity to play in the mortgage sandbox as well. They're getting into the housing business --

Gross: [laughs] "Mortgage sandbox" sounds like no fun.

Moser: It's not the sexiest business in the world, but there's a ton of money flowing through it, and it's nice to see DocuSign trying to get their share there as well. So, I think, all things considered, strong quarter. Like you said, not traditionally -- is that what you said? -- profitable. We're living in a non-GAAP world now anyways, Chris, so you just have to go ahead and embrace it.

Flippen: It's so easy to point at DocuSign and say that it's a business that's going to lose out to something like Adobe (NASDAQ:ADBE). It's kind of the Slack vs Microsoft Teams argument, where if a company's already using Adobe, then why would they go out of their way, pay extra, pay the premium that exists for DocuSign, when they have something already accessible. I think it goes, like Jason mentioned, to two testaments. A testament of the really strong underlying products. They're a solely focused business on e-signatures. That means they can make that experience as great as possible. But, expanding it to the entire contract lifecycle management business. And they see that as their biggest opportunity moving forward. There's definitely value in addition to being the verbiage of e-signatures, right? DocuSign it.

Moser: Yeah, and customer growth is still there. Total customers up 24% now to 562,000. Even more importantly, enterprise and commercial customers grew 30% to 69,000. So, something they're doing is working.

Hill: Third quarter same-store sales for discount retailer Five Below came in a little higher than Wall Street was expecting. Ron, are they raising prices at Five Below? The name of the business is Five Below and I'm seeing all these stories that they're starting to raise prices.

Gross: A little bit. Introduced their Ten Below gift shop section, highlighting on more expensive toys and games. We can make fun of that all day. We'll see how that goes. This is a little bit like Ulta, where if you focus on the top line, things look pretty good. Net sales up 21%. Comp sales up 2.9%. But when you start to look at the cost structure a little bit, it gets a little bit more of a mixed bag. Operating income was actually down as a result of tariff and some other merchandise costs. Earnings actually down 24%. The company continues to grow, continues to open a significant number of stores -- 61 new stores recently, almost 900 now in total. They did manage, interestingly, to raise the low end of their full-year guidance despite the fact that it was a relatively weak report on the bottom line. But even so, 40X for a business that is having a little bit of struggles right here, especially on the cost side, I'd be careful.

Hill: How big a footprint are they looking to get? I mean, 900 locations. We see a lot of headlines about bricks and mortar stores closing. Put them, along with Planet Fitness, on the list of businesses that are expanding their footprint.

Gross: Significantly more expansion, to lots more areas of the country. They feel that there's plenty of room to grow.

Hill: In December 2015, Constellation Brands made headlines when it shelled out $1 billion for Ballast Point Brewing, a craft beer company based in San Diego. This week, Constellation Brands sold Ballast Point to Kings & Convicts, a tiny brewery in Chicago. Emily, the reports from the beer industry trade media indicate that Kings & Convicts paid somewhere in the neighborhood of $75 million to get this. What is going on at Constellation Brands?

Flippen: It's a great question. Those same reports say that they actually weren't shopping around Ballast Point either, which means that some point, likely, Kings & Convicts just approached them and said, "Hey, we could give you $80 million for this." And then Constellation Brands took it. They were like, "Yeah, good deal!" Something they paid, just three or four years prior, $1 billion for. It's clearly a bad acquisition their part. They said it was just an issue of how they saw the beer industry developing, and just simply not in the direction of Ballast Point. But it doesn't build a lot of confidence in investors, especially because up to the point of this sale, they'd only impaired about $200 million worth of that acquisition. It begs the question of, you clearly under-impaired this asset. What does that mean for all the other acquisitions that you've made?

Hill: And, at the time, Constellation Brands was seen as, maybe they overpaid, but they'll be able to expand it in their network, and they weren't able to do that.

Moser: Well, they weren't able to do that. There were two concerns with the acquisition as I saw it. No. 1: they paid 12X sales for it, which is just absurd. I mean, if you look at Boston Beer today, trading around 4X sales, and that business has been on fire thanks to the seltzer and cider parts. But then you just have to wonder, ultimately, they miss read how that brand would proliferate, nationally speaking, and it just never worked out.

Hill: A late Thanksgiving means this is the shortest holiday shopping season since 2013. Here with some insights and more on the toy industry is Jackie Breyer, editorial director of The Toy Book and The Toy Insider. She joins me now from New York City. Jackie, thanks so much for being here!

Jackie Breyer: Thanks for having me!

Hill: Before we get to the toy businesses themselves, let's talk about the toys. What are the hot toys for 2019?

Breyer: That is a great question. I would love to say it's baby Yoda toys. I don't know if you've heard all the excitement around the new baby Yoda. Have you been on the internet lately?

Hill: Oh, I'm a Disney+ subscriber. I was looking for some baby Yoda stuff and, like everyone looking for baby Yoda stuff, instantly disappointed that nothing's available.

Breyer: It is not there. You can pre-order, but it's not here yet. So, while it is probably the thing people are most excited about in that area ... There are some toys that are hot, and this is the time of year when it starts to become apparent what are the hot, in-demand toys that parents should be buying quickly or else they're not going to be able to get their hands on them. Now that Black Friday and Cyber Monday have passed, everyone's out shopping and taking it seriously. Like you said, it's coming up really fast this year.

One thing is Ryan's World. I don't know how familiar you are with Ryan Toys Review, the YouTube channel.

Hill: I am not.

Breyer: Ryan is a YouTube star, multi-millionaire child who unboxes toys. He has over 30 billion views on his videos. He has his own toy line. So now, kids can unbox toys just like Ryan. Ryan's their best friend, and they go on adventures together. So, anything Ryan -- there's a pirate treasure chest, there's a secret safe, there's surprise eggs -- it's all hot. If your child is into Ryan, you're going to want to pick those up if you come across them.

Hill: What about technology and toys? Because it seems like for years, toys have essentially been losing out to versions of technology, whether that is a consumption device like an iPad or some sort of tablet, or just video games themselves. Are the toy makers doing a better job now of integrating technology into actual toys?

Breyer: You know, it's interesting. Yes, on the one hand, absolutely, we're seeing a much better job. It's not just tech for the sake of technology, like I would have said five or 10 years ago. There are companies doing a great job with technology. Hatchimals, which was one of the super-hot toys a few years back, they have Hatchimals WOW, it's very intuitive. Kids have a lot of fun with it. Cubby, the FurReal Friend, the Curious Bear from Hasbro (NASDAQ:HAS). That is really cute, great use of technology. And, stuff like the Harry Potter Invisibility Cloak. I don't know if you're familiar with that, from Wow! Stuff. Kids can put on the invisibility cloak just like Harry Potter, and when they're facing their tablet, it appears that they're disappearing behind their cloak, completely invisible. So, there's a lot of cool technology that we're seeing out there.

But the flip side of that is, parents, especially millennial parents, seem to be reverting back to the classic toys and traditional play patterns. We're seeing, actually, fewer tech toys, and more inclination toward the simpler, classic play patterns that we had when were kids.

Hill: That's interesting. One of the notes I had down was about the level to which toys are cyclical. I'm not a millennial, but I've absolutely bought things in the past for my kids that were updated versions of toys or games that I enjoyed when I was a kid. It's interesting to hear that millennials are doing that as well now that they're becoming parents.

Breyer: Yeah, it's completely true. The retro nostalgia is real with millennials. I'm a Gen Xer myself, and I have little kids, and I love to buy them 80s stuff. [laughs] We have an Asteroids machine at home. I love introducing my favorite things to them. I know that parents do love that. If it's one of your favorite memories, and you see something that is either the same or an updated version of that, it's just a really great way to actually share an experience with your kids, rather than giving them something and kind of walking away.

Hill: When it comes to the toy retailers, the major retailers like Walmart, Amazon, Target, what does the competitive landscape look like these days?

Breyer: It's very interesting. After Toys R Us went under last year -- you know they relaunched a couple of stores this year. We were actually there yesterday and we had a lot of fun. But, it's not what it was. It's not hundreds and hundreds of stores. So, Target, in my opinion, is winning the toy war of trying to snatch up the extra toy dollars left on the table after Toys R Us went out of business. They've done a number of different things to make themselves the location for parents and gift-givers to go shopping for toys. First of all, they did partner with Toys R Us. for example, the Toys R Us store I was in yesterday, in Paramus, New Jersey, they have kiosks all over the store, but they're highly intuitive. Let's say I'm in their Lego shop. I can go in their Lego shop. They have stuff there in the store, but not nearly the hundreds and hundreds of Lego SKUs that are out there. So, you can go, find what you want on the kiosk. Super easy. Scan the QR code with your phone, and you're instantly adding the item to your cart, in the Target app. So, Target has that. And really, anyone who goes to toysrus.com and shops for toys, when they go to purchase, they'll be rerouted to Target. So, maybe a little bit of consumer confusion. Why am I on toysrus.com and I'm actually being shipped over to Target? But, people trust Target, and it's just extra traffic. So, that's one way. 

They also launched Disney boutiques within some of their stores. With the Disney partnership, they're driving traffic and consumer experience. There's a lot of interactivity. Lights and sounds and fun things for parents and families to actually do in those little boutiques. I think they're in 25 stores, but they're expecting to expand it next year. And there's a lot of exclusive products there that previously you would have only been able to find at a Disney Store.

And then they're also using Shipt, which you probably know they acquired not that long ago. So, now, they have same-day delivery. So, when you're shopping -- I've done this myself -- you need X, Y, Z stuff. You don't want to run out. You order it. Your stuff comes in a couple of hours, but you could add toys, you can do your holiday shopping, and they'll deliver it all to you, same day.

So, I think all these -- the conveniences, the experience, and really the expansion in general of their toy offerings, and the refreshment of their toy section -- that leads me to feel like they are winning the toy war.

But, other retailers are doing a lot to gain some traction in the toy category. Walmart launched the Walmart Toy Lab, which allows kids to go on to Walmart's website, and they are testing toys virtually. It's fun, it's cute, it's interactive, and it helps kids decide what they want to ask for for holiday gifts.

And then, Amazon. Who doesn't love to shop on Amazon? It's just the most convenient thing. They have launched their second annual print copy of their toy catalog. It's kind of the reverse. They're taking their tech experience that makes it so convenient and so easy and bringing it into homes. So, you're getting this 90-page, beautiful catalog. It's actually a really nice, thick stock. And you hand it to your kids and say, "Circle what you want." It's bringing back that retro nostalgic Sears toy catalog feeling for parents. And then parents, if they don't want to actually search on Amazon, they can just scan the pictures in the catalog, and it populates into their Amazon app. It's really simple.

Hill: I'm just shaking my head at the idea that of all the things Amazon has done, they've resurrected the Sears Wish Book catalog.

Breyers: [laughs] It's actually really nice, too! It's beautiful. I can't imagine what they spent on that. It's 90 pages of thick stock. It really makes you want to flip through it. They did a really good job with that.

Hill: So, at The Motley Fool, we look at businesses, we look at the stock performance of those businesses. And when you look, particularly over the last few years, at Hasbro and Mattel, from an overall business standpoint, from a stock standpoint, Hasbro has dramatically outperformed Mattel. What is the view from someone in your position, who looks at them as producers of actual toys? How do you think about Hasbro and Mattel?

Breyer: Well, they're definitely the two dominating forces. I've been in the toy industry now for over 17 years, so I've seen a lot of back and forth. Mattel is No. 1, Hasbro's No. 1. They're both huge forces to be reckoned with. They both have really great core brands. For Mattel, Hot Wheels and Barbie are strong. They continue to be strong. And while it's somewhat cyclical, they're always among the top 10 selling toys for the holidays. Every year, no fail. And that's really important. I think that having lost the Disney license a few years ago to Hasbro was a big deal. Hasbro has Frozen, they have Star Wars, it's huge, and they also have Marvel. With all of those really high-profile licenses, they've got a big advantage that way. And, of course, they have their strong proprietary brands as well, like Nerf. But everyone is looking for the baby Yoda -- well, it's not actually baby Yoda. But, Hasbro is going to have collector products, but not until probably third or fourth quarter next year. So, we'll look for that to be exciting for everyone. Mattel, actually, even though they lost that license, they are going to have the baby Yoda plush with a vinyl head, apparently. We call it slicensing, when they take a license and slice it like, "You can have this version of the plush, and you can have this version of the plush." So, it's interesting to see that Mattel will also have a license for that property.

Hill: As we talked about at the top, it's a really crunched timeframe for people who are doing their holiday shopping. I'm curious before we wrap up if you have any tips for people who are doing some, I don't want to say last-minute toy shopping, but we're getting pretty close to the last minute.

Breyer: Yep. First of all, grab that must-have toy when you see it. If you're shopping for a preschool kid and you see a Ryan toy, just buy it. But, really, any toy. If you see your kid's favorite character or something like that, don't wait, because it will be gone. Christmas is three weeks away at this point. If you're shopping for a kid you don't know as well, stick with the classics, traditional play, board games, Legos, Play-Doh, all that kind of stuff is solid winners. Just keep an eye on the online shopping. I know everyone thinks, "So convenient, I'll just buy it on Amazon!" Things can get back ordered. Even if something is Prime, make sure of the actual delivery date. Sometimes you just assume that means two days or one day, and it could mean two weeks or it could mean January. So, just be careful. Pay attention to that thing. Know your prices. There's price gouging out there. If you are shopping online in particular, know what a product should cost so you don't overpay.

Hill: If you want more information, you can go to thetoyinsider.com or toybook.com. Jackie Breyers calm. Jackie Breyer, I know it's your busy time of year, so thanks for being here!

Back in July, an independent group of McDonald's franchisees sent a letter to company management pleading for a better chicken sandwich to compete against the likes of Chick-fil-A. This week, that wish was granted. McDonald's is testing a Southern-style crispy chicken sandwich in Houston, Texas, and Knoxville, Tennessee. Our producer Mac Greer will be heading back to Texas over the winter break, so we'll get his review in January. But the dozens of listeners are already sending in their reviews.

We got an email from Judy Griffin in Knoxville, Tennessee who writes, "The bun was buttery, similar to how Chick-fil-A's buns taste. The chicken also tasted very similar. But it was not as thick as Chick-fil-A's, nor as crispy. If Chick-fil-A is a 7 out of 10, I would say this is a 6 out of 10. I would get it again, especially on Sundays. Thanks and keep up the good work."

Judy, thank you for doing some boots-on-the-ground research. And, did you catch the key phrase there, Ron? Especially on Sundays.

Gross: Yeah, that little poke.

Hill: That is what you're hoping for if you're McDonald's. What do you think, Emily?

Flippen: I think we've all been really excited, waiting for this chicken sandwich for a while, but perhaps no one was more excited than Bob Derrington, the managing director and senior research analyst at the Telsey Advisory Group, who had some choice words about the McDonald's sandwich. His phrases included that they were "lightly battered, juicier, and more flavorful as an upgrade from MCD's heavily battered, less juicy buttermilk crispy chicken sandwich." And he said that it included a "full-muscled chicken breast."

Moser: That just sounds grody.

Gross: Am I the only one that remembers from 2005 to 2015, they actually had a Chick-fil-A knockoff sandwich already at McDonald's, with the pickles and everything? I hope this is better.

Moser: I have zippy concerns about the sandwich because I'll never have it. I just don't go to McDonald's. I'm just excited about the validation, because I feel like we were talking about this on MarketFoolery several months ago. "Of course leadership is going to do this, they're getting feedback from boots-on-the-ground franchisees, it's just a matter of time!" And then it's just crickets, nothing. The validation is what makes me feel good about all this.

Keep the emails coming, radio@fool.com is our email address.

Let's get to the stocks on our radar this week. Our man behind the glass, Steve Broido, he's off this week. But Rick Engdahl is here. So, Rick will hit you with a question. Ron Gross. you're up first. What are you looking at this week?

Gross: I'm looking at Hasbro, HAS. One of the world's largest makers of toys and games. This is a little hairy here. Weaker than expected quarterly earnings and concerns over tariffs really caused a dip in the share price recently, I think giving investors a nice opportunity to buy the stock. Company has a nice combination between toys and brands and entertainment. Successfully expanding their digital offerings. They've raised their dividend every year for the past 16 years. Current yield is 2.7%. I think they're set up well for the holiday season.

Hill: Rick, question about Hasbro?

Rick Engdahl: They do Star Wars and Marvel and all that. What's the movie property they don't have that they need?

Gross: They've got Frozen. They've got Iron Man and those guys. What do we have?

Moser: They could probably dip their toes into the Fast and Furious world. Those movies don't ever seem to stop.

Gross: They never end, right? I like that, I'm going with that.

Hill: Emily Flippen, what are you looking at this week?

Flippen: Hasbro, more like Has-been! You know what I'm looking at? A way more exciting company!

Gross: I'm just sitting here, minding my own business!

Flippen: CrowdStrike (NASDAQ:CRWD) is my radar stock, CRWD. CrowdStrike is a cloud native security platform. It really caters to organizations that are looking to protect themselves from cyber security threats. Really impressive financial results. Average annual revenue grew 97% last quarter. 120% dollar-based net retention rate, so, it's a strong business.

Hill: Rick, question about CrowdStrike?

Engdahl: Emily, weren't you one of the people who recommended FireEye? Why should I trust you on CrowdStrike?

Flippen: I was not one of the people that recommended FireEye, thank goodness there! [laughs] But, it's a good question. CrowdStrike is a cloud native platform. It's actually one of the big competitors that's been stealing customers from companies like FireEye. I think the bigger concern is Palo Alto Networks, which is the stronger legacy player.

Hill: Jason Moser, what are you looking at this week?

Moser: It was mentioned earlier, Adobe, ticker ADBE. Earnings come out this coming Thursday, December 12th. In simplest description, Adobe is a digital media company. But it's clearly very wide-reaching in what it does there. Big subscription model that I'm a fan of. 88% of revenue is tied to subscriptions that range anywhere from one to 36 months. And much like DocuSign, that we talked about earlier, they've done a very good job in building out an impressive suite offerings based on their core competency in digital media. Really excited to see where Adobe Arrow goes as we move into this AR and VR driven world. And you know, I did just bring Adobe into our augmented reality service here, so I'm excited about that.

Hill: Rick, question about Adobe?

Engdahl: Jason, as someone who works in the multimedia world, does Adobe even have any competition anymore?

Moser: I think that's a very good point. Adobe is a very big company at this point, around a $140 billion market cap. There are competitors out there trying to dabble in the space. But it's amazing, the resources that Adobe has to fight back. Any competition that springs up, they can snap them right up. I really think Adobe owns this market.

Hill: Adobe, CrowdStrike, Hasbro. Three very different businesses. Rick, you have a stock you want to add your watch list?

Engdahl: Well, I already own Adobe, so I'll throw Hasbro in the list.

Gross: Finally, a win! Had to get Steve out of here to finally get a win.

Engdahl: I've got kids, Emily, I'm old.

Hill: Alright. Ron Gross, Emily Flippen, Jason Moser, thanks for being here!

Gross: Thanks, Chris!

Hill: That's going to do it for this week's edition of Motley Fool Money. Keep the emails coming. radio@fool.com is our email address. The show is mixed by Rick Engdahl. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening, we'll see you next week!