Buy! Buy! 2007 'Hot Dozen' holiday toys

NEW YORK (CNNMoney.com) -- Despite the recent rash of toy recalls, industry expert Jim Silver predicts that parents will snap up the hottest must-have items during the upcoming holiday season.

Silver, editor of Toy Wishes magazine, released his annual "Hot Dozen" list on Tuesday, forecasting the most popular toys for fourth-quarter holiday shopping.

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12 Best toys of 2007

Toy Wishes magazine picks Barbie Girls MP3 player, Fisher-Price's Smart Cycle and Rubik's Revolution among toys of the year.

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This year's candidates include the Barbie Girls MP3 player from Mattel (Charts, Fortune 500), Smart Cycle by Fisher-Price, Revolution by Rubik's and Eye-Clops electronic magnifier from Jakks Pacific (Charts).

The list also features Aqua Dots Super Studio from Spin Master Toys.

But a month after the Hot Dozen list was announced, the Consumer Product Safety Commission and Spin Master recalled about 4.2 million Chinese-made Aqua Dots bead toys after tests found they contained a chemical that caused children to vomit and become comatose after swallowing them.

Silver said Toy Wishes was no longer endorsing the product. "This was a very popular product. So this recall is a disappointment for retailers like Toys "R" Us and others. We encourage parents to take this toy away from children and follow the directions related to the recall," Silver said.

One trend in this year's "Hot Dozen" list: Toymakers are trying to keep up with the popularity of consumer electronics products like videogame consoles and Apple's iPod and IPhone. Silver noted that seven of the 12 toys his magazine selected "have a screen or a monitor" - compared to only two last year.

"Toymakers know that kids at a younger and younger age are gravitating towards electronics - they're born and they're on a computer," Silver said. "It's exciting that toymakers are now more in tune with how kids are playing today."

He also noted that toy prices have moderated compared to last year. "The average price of a high-end toy is between $40 to $55 this year, versus $60 to $80 last year," Silver said.

Silver and other toy industry insiders said they are optimistic that this summer's recall of millions of Chinese-made toys over lead contamination or defective design won't threaten critical holiday sales.

In fact, November and December account for as much as two-thirds of the U.S. toy sales, which totaled $22 billion last year.

The toy industry is still reeling from a string of recalls since Mattel and RC2 Corp. (Charts) pulled back millions of popular items found to contain lead, a substance that if ingested can poison young children.

In late September, RC2 announced an additional recall of 200,000 of its Thomas & Friends wooden railway toys over lead paint concerns.

Mattel CEO Robert Eckert testified before a Senate panel in September that the company had tightened its manufacturing, testing and safety processes in China.

"I think the majority of parents realize that lead contamination isn't the major safety issue with toys. The biggest concern is choking hazard and we haven't gotten a lot of toy recalls for choking risk," Silver said.

Søren Torp Laursen, president of LEGO Americas, told CNNMoney.com that he's not too worried about the fallout on sales from the recent recalls.

"From our perspective, we think there's some concern among consumers but not for parents," Laursen said. "Parents know what type of toys to buy for their children. But with the less experienced toy buyers like aunts and uncles, I think they may choose to give gift cards instead."

He added that he thought the recalls will result in safer toys. "This Christmas season could be the safest season to buy toys, because companies are doing so much more testing and taken more precautions," Laursen said.

At the same time, Silver cautioned that the additional testing could put a crimp in holiday-season inventory.

"Things will get slowed down at the ports, and it could take longer for toys to get to shelves in time for Christmas," Silver said. "I think there'll be a shortage of the top 100 toys in December."

Isaac Larian, founder and CEO of MGA Entertainment, which makes the Bratz dolls, also foresees a shortage because of the heightened testing and the decision by retailers to cut back on inventory.

Overall, he is less sanguine about the market's prospects this year. "I think the whole [toys] business will be down for the year because of the recall concerns," he said.

-- This is an updated story. An earlier version of this report appeared on Oct. 2.