With Christmas just around the corner, government officials in Ottawa are working on a special present to put some life back in the Canadian economy: a temporary sales tax removal on things such as toys and restaurant meals. But it is not that easy, and there are signs it may not work. In fact, Spin Master (TSE:TOY), one of Canada’s leading toy makers, says it is not likely to benefit from this proposal.
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The move would not only knock the federal sales tax off toys and restaurant meals, but would also take taxes off diapers, beer and wine, and several other items. The reason is pretty clear: to encourage shopping ahead of the most wonderful time of the year for retailers.
With the government of Canadian Prime Minister Justin Trudeau under fire, they are rushing to provide incentives aimed at boosting the economy. But Canada’s Parliament has been preoccupied with other government business and politics in recent months, and it’s not clear if the tax-free proposal will be implemented.
A Good Time for Toys
For Spin Master, the timing of such a tax cut would be welcome. With holiday shopping underway, anything that encourages toy purchases could be a windfall, particularly these days when shopping on non-essentials is starting to pullback.
Spin Master recently launched a special event celebrating 50 years of the Rubik’s Cube. Spin Master’s celebration was packed with puzzles and a special appearance by the Rubik Cube’s creator, Professor Erno Rubik. Spin Master even got to show off the new Rubik’s Cube app.
Is Spin Master a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:TOY stock based on three Buys assigned in the past three months, as indicated by the graphic below. After a 6.87% loss in its share price over the past year, the average TSE:TOY price target of C$42.33 per share implies 34.59% upside potential.
