I've got my Eye-Clops on this one. Toymaker JAKKS Pacific
Thanks to a bunch of musclebound guys and a meek 15-year-old girl, Jakks reported a 20% increase in revenue and a 48% surge in profits compared to last year's fourth quarter. The licenses it holds for World Wrestling Entertainment
JAKKS won't be bereft of any wrestling goons once the WWE leaves the ring, however. The toymaker signed up the WWE's much smaller, privately held rival, TNA, which will launch just as the WWE deal ends. Sure, the outsized personalities in the wresting world have built up the "sport" over the years, but JAKKS' strength in the action-figure wresting-toy line certainly has helped revitalize pro wresting. I'd say Mattel's getting a gift of JAKKS' years of marketing here, but I wouldn't underestimate JAKKS' ability to help TNA grow.
If the toymaker was just wrestlers and Hannah, I might have concerns about the company as an investment. Wrestling's popularity has turned south before, and Hannah's got to graduate high school someday. Fortunately, JAKKS possesses a few evergreen properties that continue to perform, in addition to having the knack for producing a host of must-have toys.
The Eye-Clops, one of last year's top toys, is a powerful electronic magnifier that now includes a USB port, so that it can be used like a digital camera. This year, JAKKS has night-vision goggles that not only really work -- I've tried them out; they're that good -- but are also priced at an affordable $100. Kids are going to be crazy for these.
At just 11 times 2008's earnings, JAKKS is selling at a slight discount to either Mattel or Hasbro. Sure, it's much smaller than its rivals. The $857 million in revenue it made for all of last year is less than what Mattel realized in its weakest quarter. Yet JAKKS has a depth of product -- Hannah, Pokemon, its own in-house-developed Plug It In & Play line -- that puts it on equal footing with the competition.
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Fool contributor Rich Duprey owns shares of Disney and Wal-Mart, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.