Category: Contrarian

Nintendo Might Be Worth Playing (NTDOY)

Forget the hottest trends in game counsels for a second. Think long term. Will Nintendo be there? The Pokémon craze has topped out. The Nintendo Switch is selling but nothing crazy. All seems calm. For now.

What happens when the next Pokémon hits? Will it be Playstation or Xbox that builds the tech? It will probably be Nintendo. They’ve done it before, they can do it again. While Xbox and Playstation have their niche market, they never had a worldwide phenomena. Pokémon went viral. Not just media viral. Like out in real life viral.

The chart looks like we could be making a double bottom. If that’s the case, I want to place a bet now. Long-term I like this company. They have demonstrated an ability to capture the world’s attention like I haven’t seen for a video game since…the original Nintendo home system.

The classic Nintendo is making a comeback as well. Old school gamers are introducing these technological artifacts as starter to kits to the younger generation. Before Call of Duty or Madden, kids need to see what video games are. Old school Nintendo dominates the retro market, just as it dominated the main market back in the 80’s and early 90’s.

The stock has been a perennial pink sheet winner. Nintendo has managed to use the OTC market to stay listed and let investors participate with considerably less fees and oversight from traditional exchanges. If they ever did go traditional, it’s unknown what the status of the “old stock” would be. Investors will have do their own research as to Nintendo and its pink sheet status and decide if it’s worth the risks.

Look at the expected earnings growth. This chart highlights the amazing outlook. The earning per share nearly doubles in two short years. With the previous chart showing a double bottom, the long term bet should be placed now.

Nintendo might have another trick up its sleeve. There might be a few Pokémon’s left in its arsenal before its upended by a game changing revolutionary way to play video games. Some say that could be virtual reality. Nintendo could have a hand in that too.

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Contrarian Indicator

The latest BofA Fund Managers Survey, which took place between Jan 4-10 or just after the worst December for the S&P since the Great Depression, polled a total of 234 panelists with $645bn AUM, investors’ expectations for global GDP growth continue to fall, as net 60% of those surveyed think global growth will weaken over the next 12 months, the worst outlook on the global economy since July 2008 and below the trough in Jan. 2001. In fact, as BofA’s Michael Hartnett observes, FMS Global macro expectations are “too low unless recession imminent”, which of course means that all else equal, Wall Street is now certain that a recession is imminent. As our astute readers will understand shortly, this is a contrarian indication and therefore should be buying hands over fist as the money managers will need to play catch up on their portfolios after the dismal December selloff.

As the next chart will show, inflation is negligible so the central bank will curtail its interest rate ramp in the future (also Trump is DADDY.)