Motley Fool: Take two – or more – stocks
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 (Nasdaq: TTWO), which owns one of the most played titles, Grand Theft Auto V, and is investing 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. Meanwhile, Grand Theft Auto’s player base is more than three-quarters greater than it was two years ago, and NBA 2K has seen 13% year-over-year growth from the early spenders 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
Question: If I have a little extra money, is it better to pay off my mortgage faster or invest it in the stock market? – SJ, Ocala, Florida
A: 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% on 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% – then 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. However, don’t invest the money you’ll need over the next five years in stocks.
Question: Where can I view historical P / E ratios online? – LB, LaCrosse, Wisconsin
A: Past price-to-earnings (P / E) ratios are useful for getting a rough idea of how overvalued or undervalued a stock is. If Buzzy’s Broccoli Beer (Symbol: BRRRP) 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.
My dumbest investment
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. – SD, online
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 into profitability. 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 very 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 stock has been volatile, rising and falling in the course of 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.