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Oct.09

11:51 AM ET

Tuesday, 9 Oct 2007

Trading Toymakers

Posted By:Tom Brennan

Topics:Stock Picks | Stock Market

Sectors:Retail

Companies:JAKKS Pacific Inc | World Wrestling Entertainment Inc | Walt Disney Co

Toymaker JAKKS Pacific has an important analyst meeting on Wednesday. If the company announces better-than-expected results for the coming fourth quarter, as Cramer expects, the stock could skyrocket, he said.

JAKKS [JAKK Loading... () ] – maker of action figures for Disney's [DIS Loading... () ] Hannah Montana, Barney and World Wrestling Entertainment [WWE Loading... () ] – historically posts its biggest numbers during the third quarter. But analysts on Wall Street are expecting Q4 to beat. Cramer said the analyst meeting would be a “near-perfect venue” for the company to confirm the speculation.

So while Cramer doesn’t usually offer up such short-term trades, here’s one for those who are willing to make a move in two quick days. There’s a caveat, though: Cramer doesn’t recommend this trade if JAKKS goes higher than $28.75. It’s at $26 and change now.

Investors thinking longer term should wait for the stock price to come in, Cramer said. The $750 million JAKKS has $83 million in net cash, and the free cash flow could reach $100 million soon. With that kind of money lying around, JAKKS has a lot of options.

The only real black mark on JAKKS is its court battle with WWE, which means the toymaker could lose the right to market wrestling company’s action figures. But wit

h the brand bashing that WWE has taken of late, Cramer said sales of the toys probably wouldn’t have held up. Besides, JAKKS's license with WWE expires in 2009 anyway.

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