Buy Nintendo Stock

[CD_Vision]

I'm totally serious. I realize that this quarter was not good, that sales are down 60% from the same time last year. The E3 showing was pretty terrible, with very little of worthwhile mention. They're inbetween product cycles and god only knows what they'll issue to compete with the next generation of consoles. It's clear that the Japanese stock market has punished them for even a hint of weakness. So these are the reasons it's down.

Buuuuuuuuut... If you look through the last few years of financial data for Nintendo, you can see that when things are going well, they're just amazing. The company runs a 70% profit margin, which is just huge in pretty much any industry. They're sitting on a good trillion yen in cash, and their dividend policy is very lucrative. And they own several of the most loved video game characters ever made. Nintendo has an intangible asset, they own your mind.

At close of market today, the price was $32.80 for NTDOY.PK, that's the tick symbol. I think it's a really great deal, one that you can make money on for years to come.

[Budsmoka]

Nintendo seems to be running out of ideas besides your not a financial expert.

[Mod_Man_Extreme]

You know this is the same thing I told my mom back in 2006 a few days before the Wii launched but she wouldn't dare to buy stocks in general, so she missed out on riding the money wave.

[dedalusdedalus]

definitely a safe bet. market cap is currently 36.9B, and nintendo has 18.1 B in assets (of which 12.2B is in cash), with negligible debt. so even in the absolute worst case hypothetical scenario in which nintendo faces financial armageddon and liquidates tomorrow, you'd only lose roughly 50% of your investment (not too scary sounding, given all the stocks that have gone to zero, i'm looking at you wamu and lehman).

given its low downside, what's nintendo's upside? this is anybody's guess, but i'd suggest projecting what you think the wii and DSi's install base will be at the end of this console cycle and subtracting both systems' current install base. this is a rough way of estimating how many more people are left out there that nintendo can sell consoles to. but even if nintendo's close to saturating the market, i'd venture that the stock market is unreasonably bearish since the current P/E ratio is 14.9...

furthermore, the company DOES pay a healthy dividend, which looks to be completely sustainable given the amount of cash the company has on hand. you're effectively getting paid to wait while you hold the stock.

that said, i'm still a bit wary of buying nintendo stock. firstly, i don't like holding foreign stock because i don't want to deal with figuring out another country's taxes. secondly, i'm a bit wary of investing in a company that only deals with video games because it's hard to project which console will do well in the next generation.

[dedalusdedalus]

Nintendo seems to be running out of ideas besides your not a financial expert.

his post was well-reasoned. and since when does one absolutely, positively have to be an expert to give sound advice?

[ejamer]

I respectfully disagree unless you're hoping for a short-term bounce and sell within the next year.

Nintendo stock has dropped recently, but is still very high compared to it's historical value. I don't know how long they will maintain the current spike, or whether they can push the stock price back to the insane levels just before '08, but buying during a peak is rarely good business if you're looking for a long-term investment... and Nintendo is still riding out their recent peak.

Nintendo is not a bad option. It's a decent stock that does offer dividends. But the right time to invest would have been a couple of years ago when the market was Wii-crazy just after the GameCube "failure". The stock market is fickle, and betting that Nintendo will outdo their recent success is a gamble I'm not willing to take right now.

[CD_Vision]

But the right time to invest would have been a couple of years ago when the market was Wii-crazy just after the GameCube "failure".

That most certainly would have been a good time. Experience (And Benjamin Graham) have taught me that it's very profitable to buy when things are "bad". Some other recent "bad" purchases I made:

Bought Dow Chemical just after they announced the deal with Rohm & Haas might fail and they were having trouble getting financing. Doubled my money when everything turned out to be just fine. I had similar moves on American Express and GE during that time.

Bought AK Steel when steel and other commodities were taking huge price drops. I sold out at an 80% gain.

Just a couple weeks ago, I bought Kimco REIT when everyone on the news said commercial real estate was going to hell. I clocked a 40% gain in just 9 days when I sold on Friday.

So I'm sort of pushing the whole "Bad news is a good opportunity" message. Nintendo makes bank and has a lot of assets. I don't expect this current slide to go on forever. I don't buy expecting to have these short term gains, it just sorta works out like that. If the price does go down, I will happily buy more as long as they maintain those profit margins.

[dedalusdedalus]

graham wasn't necessarily just about being contrarian. his investment philosophy is about buying depressed stocks that have an adequate margin of safety. Generally, these stocks are those with low price-book ratios.

[BigTinz]

I remember thinking many years ago, maybe I should invest in Google. The stocks are cheap...they seem pretty cool.


I didn't.


FUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU

[J T]

I'm a bit naive about this, but how does one even go about buying some stock in a company?

I would like to buy some stock in Valve. Steam sales saw a 97% increase in sales this year and I think they still have room for even more growth.

I also found out about this company that sells strips like those Listerine breath strips, but they can use them to deliver medication. They are planning a line of veterinary products that only requires you stick a sticky strip on your pet's tongue. That seems like a genius idea that will catch on.