Harry Potter and the Pot of Gold

• Electronic Arts Inc. (NASDAQ: ERTS) +0%. EA is the software developer that has the license to make Harry Potter video games. EA is not cheap -- it trades at a PEG of 2.2 -- based on a P/E of 225 and 100.6% earnings growth to $1.58 in 2008.
• General Electric (NYSE: GE) +2%. GE is the majority owner of NBC Universal, whose Universal Studios unit announced in May that it is building a Harry Potter theme park in its Universal Orlando resort. The park is scheduled to open in 2009. GE is moderately priced -- it trades at a PEG of 1.46 -- based on a P/E of 19 and 13% earnings growth to $2.50 in 2008.
• Hasbro Inc. (NYSE: HAS) +18%. Hasbro sells a variety of Potter-inspired candies. Hasbro is not cheap -- it trades at a P/E of 22 and its earnings are expected to decline 2% to $1.81 in 2008.
• IMAX Corp. (NASDAQ: IMAX) +15%. IMAX will show a big screen 3D version of the latest movie. IMAX lost money last year and is expected to do the same next year as well.
• Mattel Inc. (NYSE: MAT) +12%. Mattel makes Harry Potter action figures, games and puzzles. Mattel is expensive -- it trades at a PEG of 2.2 -- based on a P/E of 17.3 and 8% earnings growth to $1.73 in 2008.
• Scholastic Corp. (NASDAQ: SCHL) +1%. Scholastic publishes the Potter books and is cheap -- it trades at a PEG of 0.4 -- based on a P/E of 26.5 and 76% earnings growth to $2.61 in 2008.
• Time Warner Inc. (NYSE: TWX) -4%. Time Warner owns Warner Bros., which is releasing the film. Time Warner is also the parent company of this blog. The film is expected to be a huge blockbuster, following in the footsteps of its four predecessors, which have combined to gross more than $3.5 billion worldwide. Time Warner is reasonably priced -- it trades at a PEG of 1.1 -- based on a P/E of 16.7 and 15.6% earnings growth to $1.15 in 2008.

Of these 10, Scholastic is likely to see the most significant impact from the sales of the seventh and final book, "Harry Potter and the Deathly Hallows," which comes out on July 21. But the book is only one part of the Potter empire. This month the fifth movie, "Harry Potter and the Order of the Phoenix," hits theaters on July 11. Then there's all the Potter toys, video games and other merchandise.

Harry Potter author J. K. Rowling -- whose $1 billion net worth makes her the 10th richest woman in the UK -- alone knows how the story ends but we can all be sure that there's a pot of gold at the end of the rainbow for her and perhaps some of the companies in the Harry Potter Index.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares and has no financial interest in the other securities mentioned in this post.

Gallery: Everybody loves Harry Potter