(FORTUNE Magazine) – It was Irish satirist Jonathan Swift who modestly proposed that his countrymen -- facing a glut of infant mouths to feed -- learn how to fricassee the tykes for supper. Happily, today's sky-high U.S. birthrate can help put dinner on investors' tables with no such extreme measures. You can make a bundle of bucks from today's bundles of joy, as baby-boomers continue to produce ; newborns at a pace unseen since 1963. How best to play the boomlet? Carefully. Some companies have already been bid into never-never land. At $23, Discovery Zone, which runs play centers, trades at 46 times estimated 1994 earnings. Big-name toymakers are a good place to start: Many expect a banner Christmas. Giant Mattel will be able to piggyback Fisher-Price's line of preschool goodies through its own distribution channels as soon as it completes the pending merger. That should help boost Fisher-Price sales both stateside and abroad, where demand for the long-legged, blond-haired Barbie has already made Mattel a force to be reckoned with. Hasbro, dominant in board games, will play Santa this year with a talking Barney dinosaur doll, Jurassic Park action figures, and a basket of toys based on Batman movies, TV shows, and comic books. Portfolio co-manager Jonathan Schoolar of the AIM Weingarten fund, which owns equal amounts of both toymakers, figures earnings at each will grow close to 15% annually over the next five years -- twice the rate he expects for the S&P 500, although both stocks sell at about the market multiple. Says he: ''Demographics are a great theme to play because you don't have to be a genius to recognize them. You can't argue with births.'' A sweetener for both toymakers: Retailer Toys ''R'' Us is distributing 52 million catalogues, each with $491 worth of coupons, in Sunday newspapers. Though much of the cost will be borne by the manufacturers, the scale of the discount could lead to an orgy of toy buying -- which makes Toys ''R'' Us a buy as well. Analyst Deborah Bronston of Prudential Securities expects the retailer's shares to rise 24%, to $47, in a year. Jill Krutick, a Salomon Brothers analyst, sees shares of Mattel and Hasbro playing follow the leader, rising 13% and 25%, respectively, to $34 and $44. Don't be put off by recent slow earners: The baby surge could lift them even further than steady performers. Profits at bicycle maker Huffy fell 79% in 1992, in part because sales of Cross Wind -- a newfangled hybrid of racing and mountain bikes -- went flat. But new families have helped pump up overall U.S. bicycle sales 11% so far this year, and Huffy's dirt-cheap offerings -- they can run as low as $130 -- have done even better. Says portfolio manager Jerome Dodson of the Parnassus Fund: ''Any value investor looking for a baby-boomlet play should buy this stock.'' Huffy is also going to town with its line of car seats, cribs, and other children's products, as well as something fast-sprouting youngsters are bound to jump for: basketball backboards licensed by the National Basketball Association. The company controls 50% of the mass retail market. Analyst Gary Chin of Oppenheimer & Co. expects shares to rise 22%, to $24, over the next 12 months. The stock trades at a mere 13 times his estimate of 1994 earnings. Then there's Swing-N-Slide, which makes plastic and metal hardware for backyard playground equipment (you buy the necessary lumber from the home improvement centers that sell the Swing-N-Slide kits). Floods in the Midwest -- its largest market -- and a 15% spike in lumber prices dampened summer sales; the shares took a bath, falling 46%. Now at $12.50, the stock trades at just 12 times estimates of 1994 earnings, a 25% discount to the market. Analyst Krutick figures earnings should resume their 20% annual growth, and the stock should hit $16 within a year. Of course, a kid's life isn't all fun and games. Scholastic sells 150 million premium-quality books a year, aimed mostly at children from kindergarten through sixth grade. Says research director Kenneth Berents of Wheat First Securities: ''About 85% of all teachers use book clubs in their classes -- and of those, 50% use Scholastic book clubs.'' In addition to the 30 or 40 titles Scholastic pitches monthly through each of its seven clubs, the company works the book fair, catalogue, and retail markets like a pro. Despite some recent softness in its largest club, Berents says, ''No other publisher can match its distribution.'' He figures the rising school-age population will help earnings grow 18% in the fiscal year ending in May 1995 on an 11% rise in sales.

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