HITTING THE JAKKS-POT ACTION FIGURE FIRM'S FORTUNES SOAR AFTER MAKING NICKELODEON DEAL.

Byline: Jesse Hiestand Staff Writer

MALIBU - Jakks Pacific Inc. may be tempted to add another superhero to its line of action figures and toys: its own stock.

Shares in the Malibu-based company have shot up in value by more than 75 percent in the quarter ending June 29, a period that saw the company strike a long-term alliance with Nickelodeon to make crafts, activity toys and stationery.

The stock has slipped somewhat since then, closing at $15.90 Friday, but analysts believe the company will continue to grow rapidly for two reasons - because it is smaller than rivals Mattel Inc. and Hasbro Inc., and it features a product line of relatively inexpensive toys.

``People don't stop buying toys for their kids in a soft economy, but they may stop buying more expensive ones,'' Bret Gordon, an analyst for investment bank Advest Inc. in Boston.

Jakks' stock has also benefited from recent market preferences for small cap value stocks, Gordon said.

``Jakks has positioned themselves to be less vulnerable to economic downturns because the vast majority of their products retail for less than $10,'' said analyst Jeffrey Thomison of Louisville, Ky.-based brokerage firm J.J.B. Hilliard, W.L. Lyons.

Some of the recent run-up can be attributed to the Nickelodeon deal, which the company considers to be as significant as its first and only other long-term alliance, a 10-year pact to develop action figures and video games for the World Wrestling Federation. That alliance was made in 1995, the same year the company was founded.

``Not only could it add to their product lineup and revenues but it also gives them a great deal of credibility,'' Thomison said.

Both analysts expect Jakks to beat Wall Street estimates for fiscal second quarter earnings, to be released Thursday. The company will likely report about a penny above the current consensus of 34 cents per share, Thomison said.

Jakks officials declined to comment, citing the closeness to the earnings announcement.

The company saw sales grow by 37 percent in 2000, to $252.3 million. That resulted in $28.6 million in net income, a 30 percent increase over the year before.

Jakks employs about 100 people, including corporate management, and a design and research department at its Malibu campus. It also maintains a sales office in New York and an office in Hong Kong that oversees manufacturing.

Thomison remains somewhat surprised by the stock's strong quarter, given another firm recently downgraded it.

Still, he believes Jakks should further benefit from its proposed purchase of 21st Century Toys Inc., an Alameda company that makes 12-inch military action figures, accessories and vehicles. The transaction is still in a period of due diligence.

Action figures aimed at boys are the company's main product, particularly those based on WWF characters like Stone Cold Steve Austin. Other action toys are based on extreme sports and, in a line being launched later this month, replicas of BattleBots, the remote-controlled robots that engage in mechanized battle on the cable channel Comedy Central.

Another division makes plush toys and dolls for the toddler and preschool market.

And Jakks' Flying Colors division brings together its crafts and activities, including those being made with Nickelodeon, and a line of writing instruments generated from the acquisition in October of Pentech.

The successful integration of the Pentech operation is the main reason analyst believe the purchase of 21st Century Toys will not hurt Jakks' earnings in coming quarters.

CAPTION(S):

2 photos, box

Photo:

(1 -- color) Jakks Pacific Inc. production design managers Brendon Vetuskey, left, and Brent Scoufos work on toys. The company is among local small-cap firms whose stock is soaring.

(2 -- color) Dan Brodzik paints prototype action figures for the Malibu- based firm Jakks Pacific Inc.

Gus Ruelas/Staff Photographer

Box: QUARTERLY REPORT CARD