A Different Side of Video

10/20/2006 12:00 am EST

Focus:

Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

With his to-the-point economic and market forecasts, Mark Skousen is always a popular speaker at the Money Shows. But many investors also look to him for on-target individual stock recommendations, based on his macro-views of trends, like this oneā€¦

"The stock market is in a confirmed uptrend. But I've been waiting for a down day to add to our holdings. We had one recently, so now is time to take advantage of it.
 
"So I suggest that you take a look at Take-Two Interactive Software (
TTWO NASDAQ). Take-Two creates and sells entertainment software, hardware and accessories worldwide. The company's specialty is video games.

"We know the gaming sector is hot. We have already seen a double-digit percentage gain in the stock of software retailer GameStop (
GME NYSE) since we bought the shares a few weeks ago. But Take-Two is different. The company's specialty is in creating and publishing new game titles for computers and game consoles. (Much of Take-Two's software is developed by third parties.) And the company's distribution network includes toy stores, video merchandisers, and specialty retailers throughout the continents of North America and Europe.

"As you may know, Take-Two rode its "Grand Theft Auto" software to stardom a few years ago.  And you may also remember that "Grand Theft Auto" was criticized by consumer groups for its gratuitous violence. But the company's next game, "Bully," could be viewed more positively, since it takes the side of the underdog in fighting back against bullies. (The game takes place at the fictional Bullworth Academy where the gamer gets a chance to use knuckles and sling shots against the school's bullies.) The new game is intended to follow the same path of tremendous financial success that Take-Two Interactive found in "Grand Theft Auto."
 
"I realize that few of my subscribers will be lining up to buy this game for themselves. But don't think for one minute that the kids aren't. A new report from NPD Group, a market research company, shows that September's video game sales jumped by a whopping 38%, compared with the same month a year ago. And next month, both Sony and Nintendo are set to release their much-awaited next-generation consoles. That means business in the gaming industry is likely to take an immediate uptick.

"So pick up Take-Two Interactive today at a price of $15.50 or lower. And place a protective stop at $12. If you prefer to play this one more aggressively, try the January $17.50 calls (TUO-AW)."

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