Is The Fidget Spinner Craze A Golden Opportunity For Investors?

If you are reading this article to find out what the heck a fidget spinner is, you probably don’t have kids or don't suffer from clinically diagnosed anxiety. Fidget spinners are the latest toy/collectible fad sweeping the nation. While parents and teachers are trying to figure out what to make of the simple spinning devices beyond being an anxiety easing tool, investors are wondering how they can cash in on the craze.

Fad Or Functional?

In an era where children’s toys and entertainment options are getting increasingly complex and advanced, fidget spinners are simple spinning devices made up of two or three weighted prongs that branch out from a central circular bearing. If you pinch the central bearing, you can spin the prongs. That’s about the full extent of the type of action you can expect from a fidget spinner.

Yet surprisingly, kids are going crazy over the toys. Parents can appreciate the fact that in the era of iPads and smartphones, fidget spinners go for as little as $5 on Amazon.com, Inc. (NASDAQ: AMZN),Etsy Inc (NASDAQ: ETSY) or eBay Inc (NASDAQ: EBAY).

While some parents and experts argue that the toys help kids focus, stay still and deal with anxiety, some schools have banned the toys because they have become a distraction.

Fidget spinners are so popular they are exploding off shelves and e-shelves. One Benzinga staffer reported attempting to purchase his son one of three fidget spinners left in the inventory of an Amazon seller only to discover that they were sold out by the time he completed the checkout process.

Loop Capital recently upgraded its 2017 earnings estimate for Five Below Inc (NASDAQ: FIVE) on the strength of fidget spinner sales alone.

“We contacted dozens of Five Below stores around the country, and the vast majority are currently sold out of fidget spinners, with new shipments typically scooped up within hours (or less),” Loop analyst Anthony Chukumba explained.

It’s always dangerous to invest in fads, as Pokemon GO enthusiasts who loaded up on Nintendo Co., Ltd (ADR) (OTC: NTDOY) last summer can attest. However, Chukumba says Five Below could be the perfect way for investors to play the fad culture of booms and busts.

“We believe the fidget spinner craze perfectly demonstrates one of the primary strengthe of Five Below’s business model: identify the latest ‘craze,’ exploit it while it is ‘hot’ and then move on to the next one,” Chukumba said.

Loop maintains a Buy rating and $54 price target for Five Below.

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Image Credit: By Charmingco (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons