Shares of Mattel (MAT) are soaring in after-hours trading this evening after the Wall Street Journal reported that Hasbro (HAS) had made overtures about a possible merger. And that’s great news for yours truly.
This past weekend, I recommended investors buy Mattel for reasons, I should add, that had absolutely nothing to do with a possible takeover. Here’s how I described the situation with Mattel’s stock:
But the call was primarily a valuation one. I noted possible scenarios for Mattel’s shares that could see them trade down as low as $8 but as high as $26, with the odds skewed higher than the $13-and-change price at the time.
Were they ever. Here’s how the WSJ’s Dana Mattioli describes the dance Mattel and Hasbro have engaged in:
Mattel and Hasbro have been the subjects of similar reports in the past, but nothing came to fruition…obviously. But you don’t need a deal to get done to drive a stock’s shares higher and that’s what’s happening with Mattel this evening: Its shares have soared 23% to $17.95 at 5:37 p.m. after gaining 5% in regular trading hours.
And sometimes buying a stock because the upside potential outweighs the down is reason enough to buy. Mattel’s shares have gained 37% since my recommendation. Sometimes it’s better to be lucky than good.