Nintendo Co., Ltd Is a Top Play in a Rapidly Growing Sector

Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) is one of the leaders in the eSports sector. And this s sector has been one of the best performing NexGen mega-trends over the last year. It is also the fastest-growing segment within the larger sports and video game industry. Analysts expect revenue to hit nearly $1.5 billion in 2020 — up from $325 million in 2015.

When a niche sector increases by almost five-fold in just five years and the end number is in the billions, that’s a glaring signal that there is money to be made.

Japanese game maker Nintendo is both a hardware and software maker (allowing it to profit from both sides of the video game coin). And its games make annual appearances on the holiday top sellers lists. That trend isn’t going to change any time soon. NTDOY’s recently released Super Mario Odyssey sold two million copies in its first three days.

NTDOY Checks All the Boxes

There are three criteria I look for in each potential NexGen long-term investment, and NTDOY checks all the boxes. Let’s take a look:

Fundamentals: The company reported blockbuster fiscal third-quarter earnings last month — its best in eight years to be exact. Operating profit is up almost four times what was brought in last year and revenue of $4.4 billion increased 177% year-over-year. But what was even more impressive was management’s guidance. They raised their fiscal 2018 revenue forecast 28% from the previous estimate and operating profit guidance by 84%.

The stock rallied on the news, climbing to a new all-time high of $58.45 before getting caught up in the global market correction. Once the volatility is over, however, I expect the stocks with impressive fundamentals will once again lead the market. And NTDOY is one of them.

Technicals: This stock has a great chart. Amid the broad sell-off, NTDOY never came close to touching major price support at $45 or its 200-day moving average (the red line) at $44. Instead, it turned higher after briefly dipping below its 50-day moving average (the blue line).

NTDOY is now 15% off its recent low and in a solid uptrend channel, and there is no indication that the trend will not continue. Assuming it does, we’re looking at another potential 20%+ gain in the year ahead.

Intangibles: This category covers the catalysts that will drive a company in the future. And Nintendo is positioned perfectly to take advantage of the next wave of money coming into the hot eSports sector.

Its Switch console is set to become the company’s best-selling console ever. Plus, in January Nintendo had three of the top nine best-selling video games on the market. To top it all off, NTDOY is also a play on investing in Asia, which is a bonus theme that is sure to help the stock thrive in both the near and long term.

Bottom Line for NTDOY

This stock has it all, and all signs point to NTDOY being a bargain buy at current prices. I see it heading to $60 over time.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt just launched two new investment advisories focused around the “next” generation investing theme. His trademark three-prong investing approach targets the mega-trends old Wall Street is missing out on. Click here for more information on the “NexGen” Experience.


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