JAKKS Beats Aces

It wasn't easy to top market-thumping results from toy-making giants Hasbro (NYSE: HAS  ) and Mattel (NYSE: MAT  ) , but JAKKS Pacific (Nasdaq: JAKK  ) did it. The company saw earnings per share climb 33% higher to $0.12, with net sales soaring by 16% to hit $124.1 million. Analysts figured that the company would earn just $0.08 a share -- actually lower than last year's $0.09-per-share showing -- on a more modest 10% boost on the top line.

JAKKS makes action figures, electronic toys, and even chew toy diversions for dogs and cats. I guess you can say that it's (obvious pun alert) a JAKKS of all trades. The company has been able to feast on licenses, making toys branded on popular character creations by Disney (NYSE: DIS  ) , Nintendo, and World Wrestling Entertainment (NYSE: WWE  ) .

JAKKS singled out quarterly strength in its new Nintendo Pokemon toys, and one gets the feeling that the playthings will be even more popular after last weekend's successful debut of Nintendo's Pokemon Diamond and Pokemon Pearl. Another recent winner is the television plug-in version of the hit Deal or No Deal show.

Wall Street has underestimated the toy sector as a whole. Mattel surprised analysts with a profit last week. Hasbro followed suit earlier this week. Hidden Gems pick RC2 (Nasdaq: RCRC  ) also topped the pros yesterday. This doesn't mean that you should press your luck and expect a healthy report out of troubled LeapFrog (NYSE: LF  ) next week. The problems run deeper than niche-specific seasonality there. However, it's comforting to see that most of the public toy makers can turn a profit long after the holiday tinsel has been taken down.

Hasbro, Disney, and Nintendo are recommendations for Motley Fool Stock Advisor subscribers. Play around with the newsletter by taking a free 30-day trial to see what other stocks are helping the service crush the market. Mattel is an Inside Value pick.

Longtime Fool contributor Rick Munarriz wonders who will have the hot toys for the 2007 holiday season. He does not own shares in any of the companies in this story, save for Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.