Shares of ‘Grand Theft Auto’ Maker are a Good Deal in the Gaming Segment

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The motley fool

The video game industry has grown steadily over the past few decades, and advancements in technology such as mobile and cloud gaming should help it continue on this path.

This tailwind should benefit Take-Two Interactive, which has one of the most played titles, Grand Theft Auto V, and invests aggressively for the future. The company has a large pipeline of 62 new releases expected by fiscal 2024.

Demand for Take-Two’s games is on the rise. Bookings in the first quarter of fiscal 2022 were 68% higher than in the same quarter two years before the pandemic. During this time, Grand Theft Autothe player base of is more than three-quarters greater than it was two years ago, and NBA 2K recorded 13% year-over-year growth in first-time spending in the last quarter.

In fiscal 2021 (which ended March 31), Take-Two hired 700 new developers and acquired several studios (such as animation studio Dynamixyz) to lay the groundwork for further growth. . The stock recently lost 15% from its 52 week high, making it a promising time to buy stocks.

In fact, Take-Two has recently been one of the cheapest major gaming stocks on the market. It deserves the attention of long-term growth equity investors. (The Motley Fool recommended and owns shares of Take-Two Interactive.)

Ask the fool

From SJ in Ocala, Florida: If I have a little extra money, is it better to pay off my mortgage faster or invest it in the stock market?

The madman replies: Paying off your mortgage early can be attractive, especially if you are nearing retirement. But depending on interest rates and your tolerance for risk, investing in stocks might be a more profitable decision.

If your mortgage interest rate is, say, 4%, then any additional principal you pay back will save you 4% in interest payments, which is equivalent to earning a (guaranteed!) Return of 4%. Considering the long-term average annual return of the stock market of around 10% – or, to be more conservative, say 7 or 8% – investing in stocks is likely to outperform the 4% return.

Stock returns can be volatile, but over long periods of time most investors have done well. But don’t invest the money you’ll need over the next five years in stocks.

From LB to LaCrosse, Wisconsin: Where can I view historical P / E ratios online?

The madman replies: Past price-to-earnings ratios are useful for getting a rough idea of ​​how overvalued or undervalued a stock is. If Buzzy’s Broccoli Beer has a current P / E of 12, for example, and his P / E in the past was often 16 or more, it seems undervalued. (However, it is only based on this metric alone; ideally, you will assess various factors when you study a business.)

Several financial sites track historical P / E data. On Morningstar.com, for example, you can search for a company and click on its “Rating” tab; which will show you the current P / E ratio (and other measurement related to the evaluation), the P / E of previous years and the average P / E over five years.

School of fools

To be a good investor, you need to understand financial statements such as a balance sheet. Here is an introduction. (Note: If you want to get rich in the stock market over time without learning too much, you can very well just invest in a low-cost index fund, like the one that tracks the S&P 500 Index.)

There are three main financial statements that publicly traded companies publish at least quarterly. While the income statement and cash flow statement present the performance of a business over a period such as a quarter or a year (calendar or fiscal), the balance sheet reflects the financial health of the business at a point in time. given – often the end of a quarter or year.

A business’s balance sheet is like what you’d get if you counted all of your assets (like a house, car, bank accounts, and maybe a wine or art collection) and subtracted your liabilities ( mortgage, car loans, credit card debt and more), to achieve your net worth. It has three main sections: assets, liabilities and equity. Assets, often on the left, are equal or equal to liabilities and equity, often on the right.

Assets can include items such as “cash and cash equivalents”, “investments”, “prepaid expenses” (such as prepaid insurance) and “property, plant and equipment”. Some other assets, however, are not as reliable. “Accounts receivable,” for example, reflect sales money that the business has not yet received – and may not receive. And “inventory” reflects money tied up in materials that have yet to be sold, some of which may end up not being sold.

Liabilities often involve both short and long term debt. Debt is not necessarily bad, although it is better to see relatively little of it. Another liability, “accounts payable”, represents invoices not yet paid. These can actually be useful if the business delays payments until they are due and uses the money in the meantime.

Finally, equity, the difference between assets and liabilities, is the share of the business that its shareholders can claim.

My dumbest investment

From SD, online: I invested a large amount in electric commercial truck startup Nikola when it was around $ 40 a share. Well, the shares were around $ 11 recently. It still haunts me today. I’ve learned to never invest just in a story, but instead to look for companies that make money and will continue to make it.

The madman replies: This is a great lesson. Businesses with great ideas or stories can be very exciting, but they are often unprofitable in their early years, and some never turn the corner. Other businesses with deeper pockets may be able to take their good ideas and succeed with them, or a business may simply run out of funding before it is able to fully execute its plans.

If you are risk averse, stick with profitable and growing businesses, ideally those with long-lasting competitive advantages that give them an edge over their competition and help them continue to win. If you can handle some risk, you can spread your dollars over a pile of potential gems, knowing that some will likely fail.

Nikola’s action has been volatile, rising and falling on hope and doubt – and a scandal also over the false statements of the former CEO. Not only has Nikola recorded annual losses in recent years, but those losses have widened as well. He has big plans for electric trucks, but so do the big automakers.

Who am I?

I go back to my roots in San Francisco in 1853, during the Gold Rush, when a Bavarian immigrant opened a haberdashery store. Seeing that workers needed stronger clothing, he worked with a tailor in the 1870s to develop “waist overalls” made of durable fabric with rivet reinforcements. Today, with a market value of almost $ 10 billion recently, I’m a global apparel giant, with brands like Dockers, Denizen, Beyond Yoga, and variations of my own name. I collect around $ 4.5 billion a year. Since 1886, my logo has depicted two horses trying to separate pants. Who am I?

Can’t remember the question from last week? Find it here.

Trivia response from last week: Alcoa


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