JAKKS Pacific, Inc. (NASDAQ: JAKK) has emerged as one of the top NASDAQ stocks with the lowest price-to-earnings (P/E) ratios. In our latest analysis, we examine how JAKK stands out among the best NASDAQ stocks in terms of value, especially in the context of evolving economic conditions.
Revised U.S. Economic Outlook
At the beginning of the year, economists and strategists anticipated strong economic growth for the U.S. in 2025, forecasting another year of above-trend stock market performance. However, recent revisions to these projections indicate a slight downward adjustment.
Economic forecasting teams from leading financial institutions, such as Morgan Stanley and Goldman Sachs, have lowered their 2025 GDP growth estimates. Morgan Stanley now forecasts a 1.5% growth, while Goldman Sachs expects a 1.7% increase. These revised projections suggest a slower pace of economic expansion than initially expected.
This adjustment has implications for stock market expectations, including the S&P 500 and NASDAQ 100 indices. As of March 18, 2025, the S&P 500 has declined over 3.3%, while the NASDAQ 100 index has dropped more than 5.5%. With the end of the first quarter approaching, market volatility is high, fueled by the new administration’s tariff policies.
Market Volatility and Risk Assessment
Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, acknowledged that while the U.S. equity market has navigated a turbulent path in recent months, it can withstand a potential decline. In a note to clients on March 9, Calvasina stated, “Our 6,600 target can absorb a 5-10% drawdown,” but she also cautioned that risks of a greater than 10% decline have increased. If such a downturn occurs, she predicts a “growth scare” with a possible 14-20% drop from peak levels, which could push the market into a bear case scenario.
Former President Donald Trump also commented on the potential economic disruptions stemming from his administration’s tariff policies. In an interview on Fox Business, Trump emphasized the long-term benefits of his economic strategies, stating, “There is a period of transition… We’re bringing wealth back to America. It takes a little time, but I think it should be great for us.”
Our Methodology: Identifying Value Stocks
In compiling our list of NASDAQ stocks with the lowest P/E ratios, we focused on firms with a forward P/E ratio of under 10 and a market capitalization exceeding $150 million. From an initial pool of 40 NASDAQ-listed companies, we narrowed the list to the 15 stocks with the lowest P/E ratios, ranking them by the number of hedge fund holders as of Q4 2024.
Why focus on stocks with strong hedge fund backing? Research has shown that mimicking the top stock picks of successful hedge funds can yield significant market outperformance. Our quarterly newsletter’s strategy, which selects a mix of small-cap and large-cap stocks, has generated a 373.4% return since May 2014, outperforming its benchmark by 218 percentage points.
In the context of a fluctuating economy and market volatility, JAKKS Pacific stands out not only for its low P/E ratio but also for its positioning within a broader group of value-focused stocks. Investors looking for opportunities in undervalued stocks should closely monitor JAKK’s performance as part of a diversified portfolio.
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