2nd Investment Club Meeting

1
2nd Investment Club Meeting

• 9/22/2006

2
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

3
Jakks Pacific

• JAKK
• 9/22/2006

4
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
5

• 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

6
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

7
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

8
Does this fit in our Portfolio?

• Yes, exposure to small Cap.
• More Risk Involved
• Currently overweigh in Large Cap

9
Risks

• Lack of brand name
• Cyclical consumer spending
• Fed tightening
• But... Jakk has a current Ratio of 3.61
• The Good
• The Bad

10
Proposal

• Buy 5000 of Jakks Pacific (about 280 shares)