Take-Two Interactive Software (TTWO)

Video game companies? When video game companies found the advantage to after sales revenues, he got interested. Gaming is a growth industry now. Now that membership revenues have been introduced, it has made earnings less predictable. This is a structural change in the industry, which will create some investor anxiety. He would prefer IGV -A as an ETF basket of gaming companies for now.

The gaming industry has seen a massive transition from the console games to the mobile games. Trading at 25 times earnings with 10% growth rate.

He does not have exposure to this sector but keeps an eye on it. The sector as a whole is solid. The video game sector is relatively recession proof.

He doesn’t have any name in the software gaming space. Trading at 3 times PEG ratio with 10% growth rate. Valuation is a little stretched. If you have a profit on this one you might want to put a stop-loss on this one.

Sell Take-Two Interactive Software (TTWO-Q) or Electronic Arts (EA-Q)? Why not just sell half of each? Looking at the math, it looks like they both could go higher. They are trading at the same valuation relative to BV.

The chart looks wonderful. It’s moved up nicely and stayed above the 200-day moving average. Recently just broke below the 50-day moving average, and is now above the 100-day moving average. Technically, this looks pretty interesting. However, it is a bit expensive. Trading above 25X forward earnings with a 10% growth rate, so you have about a 2.5X PEG ratio. If you want, continue to hold.

It rallied from $10 to $100. This is a great sector. It has gone through this transition over the last number of years. Now you buy extra weapons and tools on line with real money. He does not think it is over yet. He would average his way into something like this. He owns three of these in a basket. He would buy any of the three. It has a PE of 25 but is a highly predictable business model.

Chart shows a little resistance around $80 in May and June. Some risks have been reduced at around $73-$74. A lot of indicators are starting to move up. It looks like it’s going to want to go through $80.35. Good risk/reward. Expects it will be $81-$82 pretty soon.

The video game phenomenon is getting another boost. We are at the beginning of the next phase. He likes it.

This has had a good run in the last 5 years. Probably one of the least volatile names in the individual gaming space. It is a creative engine. They are well known for Grand Theft Auto, or for any entertainment platform whether it is film, video, music that reached $1 billion. A good name to own.

They are cyclical. It is not a very big company, but in terms of execution, it is a very good company. Technically it is setting up very well. He prefers ATVI-Q.