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HappySqurriel on 18 June 2011
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Ail said:
HappySqurriel said:
Ail said:
HappySqurriel said:
As a general rule, most investors make very bad decisions ... It isn't that unusual to watch investors sell their stock which has already been over-sold to buy into a stock that is over-bought; and I think this has been impacting Nintendo's stock for quite some time.

When Nintendo surprised people and had a break out success with both the Wii and DS people rushed to buy Nintendo and the stock price was soon worth far more than was justified; and now that Nintendo's share price has fallen, people are selling driving the price far below what is justified.


The current P/E is around 24 I would hardly think that it qualifies as being under priced....

Especially as the average P/E for S&P 500 members for example is 14...( I know Nintendo isn't a S&P member).

The growth prospect for Nintendo over the next few years aren't that great either compared to most S&P companies..

For the past 20 years, the average P/E for the S&P 500 has been closer to 25; and the relative growth prospects for Nintendo are better than average.

Nintendo have zero presence in the new casual gaming markets, be it facebook or smart phone gaming.

Their only markets are home console and portable consoles.

Seeing the success they had in those markets this gen I have a hard time seeing how you can see growth for them in those markets ( market which by themselves are not really growing much). The only way Nintendo could have some growth there would be if they increased their market share compared to this gen and I have a hard time projecting the 3DS achieving a market share of over 70% or the Wii U having a market share of over 50%...

So where exactly are those prospects for growth ?

 

And if you really want to invest in stocks there are plenty stocks which are a lot safer now and have much better growth prospect. ( Google for example is quite a safe bet and the stock has decent growth perspective with the recent pullback..)

 

Did you know there are people in this world who are not in North America?

There are these interesting countries called "China" and "India" which have over 2 Billion people combined, and a rapidly growing middle class which is now starting to have the resources on a wide scale to buy computer hardware to play videogames and there is no (real) strong competitors in this market.