Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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| This
Company's Surprise Hit Could Mean Future Gains for Shareholders |
Published: March 2, 2007
Japan-based Nintendo (OTC:
NTDOY.PK) is the world's third-largest video game console maker,
trailing only Sony and Microsoft. The company was among the pioneers of
the industry, gaining notoriety in the late-1980s and 1990s with its
original Nintendo console.
The company also produces a portfolio of popular games, including Metroid,
The Legend of Zelda, and Super Mario Brothers. These
longstanding favorites were developed in-house and have been around for
nearly two decades.
Competitive Advantages
Nintendo benefits from its strong reputation and brand recognition with
slightly older gamers. Most were introduced to the company back in the
1980s and are familiar with the company's popular software titles and
on-screen characters. These consumers are intensely loyal to the brand.
In addition, while there is certainly some overlap, this is a slightly
different niche than that targeted by Sony and Microsoft.
We also see the new Wii console's price, availability and unique design
as key advantages for Nintendo over the next few years. Specifically,
the PS3 retails for $499 to $599, depending on which version of the
system you purchase -- and Sony is losing money even at that price.
Meanwhile, the Nintendo Wii costs about $250 and is made out of more
generic, easier-to-source components.
As a result, the Wii is both cheaper and easier to find than the PS3.
While both consoles have been selling well, the Wii has been exceeding
analysts' expectations by a wider margin. In short: the console cycle
for the Wii is ramping up faster than for the PS3. And while price is
rarely a sustainable competitive advantage longer term, in this case
it's giving Nintendo a leg-up in the sweet spot of the console cycle.
On the design front, the Wii incorporates a highly innovative controller
that is sensitive to hand motions made by the user. This allows users to
play games like golf and tennis on the machine more realistically. That
feature has proven popular and has opened up a line of games unique to
the Wii. While Sony could design a similar controller, it would take
well over a year to develop the hardware and games compatible with the
new controllers.
Growth Drivers
The primary growth driver for Nintendo over the next few years will be
the Wii. Supplies are tight at the moment, but availability of the
console is already improving somewhat. With millions of new Wii systems
being shipped all over the world, Nintendo is essentially opening up its
software to a wider audience.
All those new consoles represent an opportunity for the company to start
selling even more of its iconic software titles. Since many of the most
popular titles and characters are unique to Nintendo, the firm gets to
keep all of those revenues.
Valuation and Outlook
Nintendo trades at about 32 times forward earnings. While no analysts
publish five-year growth expectations, earnings are expected to soar
over the next two years, which makes that multiple look much more
reasonable. And with Wii sales ramping up faster than expected, Nintendo
has a good shot at beating Wall Street's expectations over the next few
years.
Good investing!
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
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opportunities each month, plus access to five model
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Market Advisor. |
Paul Tracy
founded StreetAuthority and became Chief Investment Strategist in 2001. Prior to
that he spent several years as Managing Editor at a multi-million dollar
financial publishing firm with over 150,000 subscribers. In addition to
his role as managing editor and lead financial writer, he was also
responsible for equity research and managing a team of seasoned
professional financial writers, researchers and market commentators.
Paul's previous experience
includes a position at Robert W. Baird & Co.'s full-service
brokerage operations as well as economic research work on a Money and
Banking project funded by the National Bureau of Economic Research. He
has also spent time doing outside consulting and research for the
University of Virginia, has appeared as a guest expert on several
prominent financial radio shows, and has been a featured speaker at
various investment conferences across the U.S.
Paul graduated with a B.S.
in Finance and Management from the McIntire School of Commerce at the
University of Virginia.
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