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FedEx estimates that U.S. gross domestic product for the rest of 2006 ... WWE. Partnership for video games such as WWE SmackDown, WWE RAW, WWE WrestleMania ...
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2nd Investment Club Meeting 9/22/2006
Brief Commentary • FedEx estimates that U.S. gross domestic product for the rest of 2006 will growth at 2.7% • Intel • ISRG • Drugstores • XMSR • Oil
Jakks Pacific JAKK 9/22/2006
What does Jakks Pacific do? • Sells all types of toys in the following markets: • United States, Europe, Australia, Canada, Latin America, and Asia • Exclusive Contracts: • WWE Partnership for video games such as WWE SmackDown, WWE RAW, WWE WrestleMania Nickelodeon, Disney, and Marvel
Random Products • Dog treats that remove tartar • TVGames for young kids • http://www.jakkstvgames.com/ • Stationary • Benefits of wide product range? • Sales 33% of Sales are from Wal-Mart
Industry Overview • Very cyclical and up to consumer whims. • Huge reward but of course if there is a huge reward there is a considerable amount of risk involved
Potential Growth • Earnings Yield (EBIT/Enterprise Value) 107.77M /487.67M =22% The stock is trading at a discount relative to its earnings. We should take advantage of this great value • Added Bonus: -High Return on Capital -PEG Ratio (5 yr expected):0.74
Does this fit in our Portfolio? • Yes, exposure to small Cap. • More Risk Involved • Currently overweigh in Large Cap
Risks • Lack of brand name • Cyclical ~consumer spending • Fed tightening But... Jakk has a current Ratio of 3.61 • The Good • The Bad
Proposal • Buy $5000 of Jakks Pacific (about 280 shares)