Why This Small Canadian Stock Could Be the Next Roblox

Here’s why I think Spin Master Corp. (TSX:TOY) actually has a lot in common with Roblox (NYSE:RBLX), though investors may not see it.

| More on:

Recently, Roblox (NYSE:RBLX) has grabbed a lot of headline attention with its $45 IPO. Indeed, its booming IPO has also been successful in garnering a considerable amount of attention from growth investors. Today, shares of RBLX are still approximately 50% higher than its IPO.

Judging by this steep rise, it’s clear investors are bullish on Roblox’s business model. Accordingly, investors looking to play growth in the digital gaming sector may want to take a close look at Roblox’s worthy competitors. If you ask me, my top pick right now would be Spin Master (TSX:TOY).

Here’s why I think Spin Master can take advantage of this momentum and may turn out to be a better pick than Roblox over the long run.

Adding growth to its already impressive core toy business

You may not consider Spin Master to be a direct competitor of Roblox. However, there is a high probability that these companies may eat into each other’s target market down the line.

The stock of this Canadian designer and manufacturer of toys is rapidly emerging as a hot favourite. It clocked record growth across its digital gaming segment amid the pandemic. Indeed, investors will note massive year-over-year growth of more than 400% in the company’s digital gaming segment. A large chunk of this success is due to its Toca Life World App’s crazy popularity on social media. This underscores Spin Master’s solid digital presence and potential in the market.

The company has managed to create a diversified brand portfolio and innovative digital entertainment segment. I can only imagine what’s on the horizon for Spin Master moving forward. This is one of my top picks in the innovation department in a sector that otherwise is quite boring.

All eyes on the consumer discretionary sector

The world has been cooped up a little too long indoors. Indeed, there’s a tremendous amount of pent-up demand for discretionary goods. North American consumers have been given a big boost by the pandemic in terms of savings and investing rates. I think this bodes well for companies with attractive product offerings in the consumer discretionary sector.

Indeed, I believe there’s a wave of capital just waiting to be unleashed in North America. Consumers are looking for places to spend money right now. Accordingly, investing in companies with attractive product offerings like that of Spin Master could prove to be a lucrative move.

Bottom line

I think there is a real reason to be bullish on Spin Master stock over the near, medium, and long term.

This stock has already shown excellent performance, courtesy of the company’s innovative business model. However, based on market trends and forecasts, I think the dice are loaded in favour of Spin Master shareholders right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Spin Master.

More on Tech Stocks

Person uses a tablet in a blurred warehouse as background
Tech Stocks

1 Magnificent AI Stock Down 21% That Could Transform Your Portfolio

If you’re looking for a practical AI stock with strong fundamentals and untapped potential, Descartes might be the one to…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

How I’d Build the Ultimate Tech Portfolio With $15,000

These tech stocks are well-positioned to generate strong returns due to their leadership in AI, digital transformation, and semiconductors.

Read more »

Young adult concentrates on laptop screen
Tech Stocks

Up 60% Since April, Is Shopify Stock a Good Buy Now?

Given its solid underlying business, healthy financial growth, and high growth prospects, the uptrend in Shopify will continue.

Read more »

Woman checking her computer and holding coffee cup
Tech Stocks

Best Stock to Buy Right Now: Shopify vs. Constellation Software?

Shopify and Constellation Software are very different businesses. However, if investors had to pick one, Constellation Software is likely a…

Read more »

Financial analyst reviews numbers and charts on a screen
Tech Stocks

3 Stocks That Can Electrify Your TFSA in 2025

Here's why Canadian investors should consider owning growth stocks such as AMD and BAM in their TFSA.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

1 AI Giant That’s My Technology Sector Pick of the Decade

Meta Platforms is a big tech giant that is gaining traction in the rapidly evolving AI market. Is META stock…

Read more »

Data center woman holding laptop
Tech Stocks

Why I’m Obsessed With This AI Stock Trading at Fire Sale Prices

Blackberry's growth is expected to ramp up as is its profitability and shareholder returns, as its transformation takes hold.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

I’m Staking My Future on This AI Stock While It’s Still Cheap

Down 30% from all-time highs, AMD is an undervalued AI stock you should buy and hold over the next decade.

Read more »