With the long weekend ahead (when most people hardly think about investing and the stock market), I've decided to share some ideas for easy contemplation. I'm not saying that any investment should be entered into lightly, but these securities seem to warrant further investigation.
JAKKS Pacific (JAKK) is a small-cap toy company. The company also happens to offer toys via amazing licenses including Fisher-Price, Spider-Man, Iron Man, Sesame Street, Disney Princess and Cabbage Patch Kids. Interestingly, JAKK is reintroducing the iconic Cabbage Patch doll. Older mothers and fathers may remember how immensely popular these dolls were. Stores could not stock them fast enough. JAKK is reintroducing the doll to today's market and it could be a big winner. The dolls will come with the popular Twinkle Toes shoes made by Sketchers (SKX). JAKK shares trade for about $8, valuing the business at $172 million. After a couple of years of net losses, a holiday hit like the Cabbage Patch doll could be a turning point for the company.
Noble Corp. (NE) is an offshore drilling contractor (not to be confused with Noble Energy (NBL)). Noble Corp. has a market cap of $8.4 billion. In the third quarter of 2014, it will spin off its subsidiary Paragon Offshore, which will include a majority of Noble's "standard spec" fleet of drilling rigs while Noble's high spec rigs remain with the parent. Paragon Offshore will consist of 34 jackups and 8 floaters. It will also pay a dividend to shareholders. Interestingly, Noble Corp. today yields 4.4%. Paragon has already arranged for its own financing. Oddly, Noble shares are trading lower, not higher. The stock fetches about $33, valuing the company at less than 10x trailing earnings. Once the spinoff is complete, the sum of the parts could exceed the stock price today. Noble Corp. just came across my radar screen, so I plan on digging deeper.
These two ideas have diametrically opposing theses: one is a play on growth while the other is a special situation opportunity. Both make for great research over a long weekend.