Here is a fun activity using ABC blocks. (I featured these blocks in an earlier post. I simply added alphabet stickers to interlocking mega blocks.) In this activity, I used a cereal container that I purchased from the dollar store and filled it with lettered blocks A-Z. My son sticks his hand into the container and picks out a letter, says its name, then connects the blocks together.
An extension to this activity would be putting the letters in ABC order. Also, older children can try to figure out what words can be made with the chosen letters. This activity can be done with any ABC blocks of course, but it is so much fun to make your own with children. Here is a link to the DIY ABC blocks blog post: http://www.fortheloveoflearningblog.blogspot.com/2013/05/diy-alphabet-blocks-hands-on-abc.html