BOJA vs. SBUX: Which Stock Should Value Investors Buy Now?
Shares of JAKKS Pacific, Inc. JAKK are riding high on strategic mergers and joint ventures, collaboration with popular brands and movie franchisees. Moreover, efforts to enter new categories, and create a solid portfolio of new and existing licenses bode well. Evidently, the stock has surged 45.5% in the past three months, outperforming the industry’s 15.7% rally. Stocks such as Activision Blizzard, Inc. ATVI, Hasbro, Inc. HAS and Mattel, Inc. MAT, which belong to the same industry, has also gained 14%, 9.1% and 25.6%, respectively, in the same time frame.
Let’s delve deeper and find out the reasons that have kept this Zacks Rank #2 (Buy) company ahead of its peers. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
JAKKS Pacific has emerged as a diversified consumer products company buoyed by a string of acquisitions over the past few years. We consider the company’s ability to successfully identify, close, and integrate acquisitions to be one of its primary competitive advantages. It continues to leverage from the acquisitions of Maui, Inc. and the joint ventures with Meisheng Culture & Creative Corp., NantWorks LLC and DHX Brands. Through such innovative partnerships JAKKS Pacific intends to enter new categories and gain market share in a competitive industry.
Notably, since the beginning of 2017, JAKKS Pacific entered into multiple licensing agreements spanning across varied product lines, which have been hitting stores throughout the year. Furthermore, developlment of product specifically for alternative sales channels — including drug and grocery stores as well as specialty stores — has proved conducive to domestic and international customers.
Also, JAKKS Pacific remains committed toward expanding its footprint outside the United States. Consistent with its endeavors, the company has opened sales offices and expanded distribution agreements for its products. Since management expects to benefit from geographical expansion, it started full-fledged operations at its newest sales office in Germany and France last year.
Meanwhile, its partnership with Meisheng is expected to result in solid growth across Asia. After launching Tsum Tsum in key international markets like Latin America and Asia, the company plans to expand its distribution in new territories moving ahead. These expansion initiatives are likely to strengthen its international presence and customer base, which in turn, should boost sales growth, profit margins and the company’s access to attract licenses.
Moreover, JAKKS Pacific has regularly brought in novelty in its products to cope with the changing play pattern of children and boost demand. Recently, demand for physical toys has been declining due to younger children’s preference for digital games and other electronic learning tools. Consistent with this trend, the company has also introduced a number of mobile gaming apps and digital games besides the physical toys, which may help it cash in on the demand for smartphone gaming. In addition, JAKKS Pacific is taking initiatives to connect with customers through digital videos, display banners and social ads, which are likely to improve customer experience. Such investment in digital innovation should help the company in brand building apart from allowing it to capitalize on lucrative technology-based gaming market.
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