By Tara Kalwarski

(MONEY Magazine) – TICKER MAT PRICE $17 P/E 15 52-WEEK RANGE $17 to $21 YIELD 2.3%

THE NEXT BARBIE? In 1998 the toy giant acquired Pleasant Company, creator of the American Girl brand. Good call. Fans pouring into American Girl stores in Chicago and New York aren't just buying (or getting their parents to buy) new dolls. They're pampering dolls they already own, spending money at the store's doll hair salon and treating them to tea in the café. American Girl sales rose 18% this spring. Mattel also saw strong growth in its Hot Wheels and Fisher-Price lines.

PROBLEM: THE OLD BARBIE Barbie sales declined 13% over the same quarter. Barbie is Mattel's biggest product line--analysts guess that it accounts for a third of sales vs. just 6% for American Girl. So you shouldn't expect Molly and Samantha to make up for Barbie's waning popularity in the girls' market.

CONCLUSION Don't bet the dream house. Mattel trades at just 15 times expected 2004 earnings. That's cheaper than the S&P 500 average, but it's no great bargain in light of Mattel's anemic 2% net sales growth last year. Management has big plans to make over the Barbie brand, but you should wait to see results first. --TARA KALWARSKI