3SOF

JAKK is a growing American company trading at less than 10 times earnings. It is a safe investment which doesn't depend on the economic cycle (even though several analysts think it does). The stock is undervalued and I enjoy the business model and fundamental trends. Nothing technical or general market related will shake me out of the conviction that we'll see a much higher JAKK 12 months from now.

I'll keep holding JAKK for the long term.

JAKK didn't raise its 2007 full year guidance, and I guess that's why investors didn't feel encouraged by the 3rd quarter earnings release. But I believe there's plenty of evidence that in the end JAKK will beat the $800 M revenue and $2.39 EPS guidance when they report the actual numbers.

When JAKK reports something like $2.5 - $2.7 EPS in 2007 I expect investors to see how undervalued this company is and they'll push it up to $35, at least that.

I'll keep holding JAKK for the long term.

JAKK is already trading at a recession/bear market level valuation. Below 10 times earnings while it grows them nicely: EPS was $0.83 in 2003, $1.49 in 2004, $2.06 in 2005 and $2.3 in 2006. For 2007 I expect at least $2.5.

My take is JAKK won't go down much more from here and when this cloud of pessimism lifts the stock will move towards the $35 - $40 range.

I'll keep holding JAKK for the long term.

Quote from: David Randolph on November 13, 2007, 04:53:41 AM
JAKK is already trading at a recession/bear market level valuation. Below 10 times earnings while it grows them nicely: EPS was $0.83 in 2003, $1.49 in 2004, $2.06 in 2005 and $2.3 in 2006. For 2007 I expect at least $2.5.

My take is JAKK won't go down much more from here and when this cloud of pessimism lifts the stock will move towards the $35 - $40 range.

I'll keep holding JAKK for the long term.

I don't remember David, or any one else discussing the lead in toys problem that has plagued some other toy companies here in the US. My take on the low multiple is the fear of a massive recall, caused  by lead in the paint or elsewhere (it is sometimes found in the plastic itself) of a toy. If JAKK has a good quality control department, this might not happen to them, if not and a recall does occur, I would expect additional multiple contraction. If a recall does not occur, with JAKK or any other toy manufacturer, multiples will expand. Perhaps someone could email them asking what precautions they are taking to prevent a recall due to lead contamination?

A secondary reason is the fear of a significant recession occurring in the US. While I don't see this as a high probability (US exports are up on the weak dollar- more US products = more US jobs), it is possible the market could become very bearish based just on the fear of a recession. Also, I agree with David that even if the economy does slow, it won't impact toy buying for over indulged American children, at least not during the Christmas season.

QuoteI don't remember David, or any one else discussing the lead in toys problem that has plagued some other toy companies here in the US. My take on the low multiple is the fear of a massive recall, caused  by lead in the paint or elsewhere (it is sometimes found in the plastic itself) of a toy. If JAKK has a good quality control department, this might not happen to them, if not and a recall does occur, I would expect additional multiple contraction. If a recall does not occur, with JAKK or any other toy manufacturer, multiples will expand. Perhaps someone could email them asking what precautions they are taking to prevent a recall due to lead contamination?

They talked a lot about this issue in the latest conference call. Personally I believe the recalls are a non-event, an infinitesimal percentage of products sold. JAKK trades at a lower multiple (JAKK is 10) than other toy companies which had recalls (MAT, for example, trades at 15 times 2007 estimated EPS, 50% more than JAKK).

QuoteA secondary reason is the fear of a significant recession occurring in the US. While I don't see this as a high probability (US exports are up on the weak dollar- more US products = more US jobs), it is possible the market could become very bearish based just on the fear of a recession. Also, I agree with David that even if the economy does slow, it won't impact toy buying for over indulged American children, at least not during the Christmas season.

Yep, and JAKK makes very cheap toys (most below $20 and many below $10).

JAKK has been dead money not just since I bought it, but over the past eight years Fundamentals continue to improve and yet the stock doesn't rise, because the multiple keeps contracting. At some point something has to give, or fundamentals turn south (I don't see it) or the market finally recognizes the company's long term value.

Maybe when the company beats its 2007 guidance and issues 2008 guidance, in February 2008, the second hypothesis happens.

I'll continue holding JAKK for the long term.

Today I want to tell you how JAKK is doing here in Portugal, which as you probably already know is where I live. Portugal is by itself a small and peripheral European country, but it can give us some clues about how JAKK is doing in the rest of Europe.

Europe still represents a small percentage of JAKK's sales (5.1%) ...



... but it is growing quite fast, roughly 60% from the year ago levels.

And I guess it will grow even faster in the future, because, to my big surprise, on the news here in Portugal I learned that the Wrestling toys from Jakks Pacific are one of the top 3 best selling toys for this Christmas I believe this is amazing because these toys not even existed here last year.

This weekend I went ahead and bought a Plug it In & Play TV game for my 4 year old son, but it was I who ended playing Ms. Pacman.  He enjoyed the games a lot too (5 games for 29 euros - a bit expensive, it is a lot cheaper in the US) and didn't want to go to bed ... he still can't play the Sony's Playstation games all by himself, because of all those option menus and buttons. JAKK's games are much simpler, just a joystick and a button, any child older than 3 can play them.

JAKK is trading below 10 times earnings and it is a growing operation. Going global is the next step, as for example, Europe could and should account for roughly half of the company's sales, at least as much as the US, not just 5% of sales.

I'll keep holding JAKK for the long term.

Almost everybody is expecting soft spending in toys this year and that may, at least partially, explain why JAKK is so undervalued. Here's an article talking about this issue:

Harris poll indicates softer toy spending this year

Almost, but not all ...

«Amazon.com  (AMZN) said it anticipates one of its strongest-ever holiday seasons for toy sales.



The image didn't come out right, but you can see the Eyeclops Bionic Eye is one of the favorites, and so is an Hannah Montana related product.

Well, JAKK was the Main's second best performer yesterday, and it still went down 1.8%

Anyway, I believe the general market hit the bottom and I expect it to slowly rise towards the end of the year.

I'll keep holding JAKK for the long term.

For this Thanksgiving I wanted to buy Wii for my kid and could not get it but got hold of nice Jakks Pacific PACMAN, heheheee. Nothing beats the ol' Pacman. Someday will compete with David for high score.

It was for $25 at Riteaid.

Quote from: stocky on November 24, 2007, 06:21:26 PM
For this Thanksgiving I wanted to buy Wii for my kid and could not get it but got hold of nice Jakks Pacific PACMAN, heheheee. Nothing beats the ol' Pacman. Someday will compete with David for high score.

It was for $25 at Riteaid.

Hehe, love that game. So far my high score is about 22,000 points

Riteaid? That's interesting, I remember that company, it is a pharmaceutical retailer, isn't it? RAD has been tanking.

I bought mine for 30 € (about $45 ) on Continente, which is the Portuguese "Wal Mart".

Anyway, going back to JAKK, we've all been hearing that the Shopping season has been strong and I expect JAKK to benefit. It will surely beat its 2007 EPS guidance of $2.39 in my view. Longer term, even if consumer spending gets softer in the US, I don't think JAKK will be affected , because it sells very cheap products.

The stock is trading at roughly 10 times earnings and holding better than the general market lately.

I'll keep holding JAKK for the long term.

Yesterday I took my Plug It In & Play TV game to a dinner at my brother's house and everybody loved the game ... my brother said he was going to buy one for him too. I think I'll buy some of these games to give as Christmas presents. Anyway, this in itself sure isn't enough to consider JAKK an attractive holding, but it's a clue. You see, JAKK's products weren't available here in Portugal last year ... and they're getting some traction (of course, Portugal is a very small market, but it shows European trends) ... WWE action figures, also a novelty, are one of the top 3 choices for Portuguese boys this Christmas.

European sales were up 59% in Q3 2007 compared to Q3 2006, but still represent just 5.1% of JAKK's total sales, as opposed to 3.4% last year. I believe European sales can grow to become almost as large as the United States sales, which still represent 82% of JAKK's total sales, down from 87% last year.

International distribution alone can account for JAKK doubling its revenues and profits in my view.

I'll keep holding JAKK for the long term.

(note for stocky: my high score in Pacman jumped to 26,000 )

Federal Lawsuit against JAKKS Pacific(R) by WWE to Be Dismissed
Sunday December 2, 8:10 pm ET


MALIBU, Calif.--(BUSINESS WIRE)--The Federal court has issued an order stating that it will dismiss the lawsuit against JAKKS Pacific, Inc. (NASDAQ:JAKK - News), its officers and other defendants in the federal lawsuit initiated by World Wrestling Entertainment, Inc. (WWE). The judge in the action captioned World Wrestling Entertainment, Inc. v. JAKKS Pacific, Inc., et al., 1:04-CV-08223-KMK in the U.S. District Court for the Southern District of New York, stated in his order that the Court "has determined that it will grant Defendants' motions to dismiss Plaintiff's Amended Complaint", and that a "comprehensive opinion" "will be issued in short order" in which "the reasons for this decision are explained in detail." The state court litigation among the parties remains pending.

Thanks for bringing us this relevant news for JAKK BigSully1:

• Jakks says WWE federal lawsuit to be rejected
at Reuters (Mon 4:45am)

This lawsuit was generally appointed as one of the main reasons why JAKK was so undervalued. The dismissal of the federal lawsuit should help JAKK's shares, even though the state lawsuit is still ongoing.

Anyway, as I've been writing throughout this thread, JAKK has been doing a wonderful job diversifying from the WWE action figures toys. It has a lot more toys in the market now than it had just a couple of years ago.

Perhaps this news can increase JAKK's P/E from the current 10 to perhaps 14? That would mean $35 per share, on my $2.5 2007 EPS estimate. Actually analysts have also raised their estimates and are at $2.48 EPS now:



I believe 2008 estimates are too low, especially since the company is growing European sales at a 60% annual rate (and its products are a lot more expensive here than in the US, so I guess the profit margin is higher).

I'll keep holding JAKK for the long term.

JAKK released great news:

• Jakks Wins Round In Rumble With WWE
at Forbes.com (Mon 4:00pm)

Also JAKK's press release says the following:

«... a "comprehensive opinion" "will be issued in short order" in which "the reasons for this decision are explained in detail." The state court litigation among the parties remains pending.»

Depending on the reasons we'll see if the state court litigation still has any legs or not.

The news was great, since JAKK has been undervalued for long probably due to this issue. But JAKK never leaves any gaps open, as the late July/early August "close the gap fury" demonstrates. So yesterday the stock came down to close the gap after the gap up at the open, rising just 5.3%, despite the relevancy of the news.

Longer term I can only see upside to JAKK and I'll keep holding.

JAKK is starting to make me sick. Remember what I said about the stock never leaving gaps open?

QuoteBut JAKK never leaves any gaps open, as the late July/early August "close the gap fury" demonstrates. So yesterday the stock came down to close the gap after the gap up at the open, rising just 5.3%, despite the relevancy of the news.

I just didn't notice another gap, to be closed at $24.53

Fundamental picture improved significantly with the dismissal of that federal lawsuit, yet the stock had to go down to close that stupid gap ... go figure. Well, stocks don't always respond to fundamental information over the short term. But over the long term value always comes up.

I'll keep holding JAKK for the long term.

QuoteFundamental picture improved significantly with the dismissal of that federal lawsuit, yet the stock had to go down to close that stupid gap ... go figure.

Well, the stupid gap is closed, now JAKK can go up as it should. $30 at the year's close isn't too much to ask.