NVDA - Nintendo: Theme Parks Movie Catalysts And Dividends

Summary

• Nintendo is a great stock to purchase now: The price is cheap and the variable dividend is nice.
• February brings a Nintendo-themed area opening at Universal Studios,  bound to attract attention to Nintendo stock.
• April of 2023 a Nintendo themed movie is set for release.
• Nintendo is ramping Switch production, having overcome supply issues.
• A new console should be in the works as the Nintendo Switch is rather long in the tooth following a nearly a 6-year run.

Investment ideas can be very complex, requiring an analyst to weave together various bits of data to broadcast where a company is going or what may be in store for the future. At other times the investment premise can be simple but very profitable. Such is the case with Nintendo ( OTCPK:NTDOY ) and ( OTCPK:NTDOF ).

The basic premise of this article is the Nintendo themed area at Universal Studios ( UVV ) may attract attention to Nintendo stock. A Nintendo-themed movie is also in the works and if these together do not push the stock up, then a projected new console should garner attention once announced. Currently, the masses are not pondering these points, giving us an opportunity to acquire shares.

Let's briefly explore the theme park, the Nintendo movie, and the next- generation console to see if this stock is worth buying for the patient investor. We made quite a bit of profit buying Nintendo when it was low for the then upcoming Nintendo Wii maybe we can again with Nintendo's next generation console once it is announced. A marketing blitz will follow the theme park and movie; pair this with a potential console in 2024 + and Nintendo looks compelling. Let's review the 3 catalysts for this stock:

1. Nintendo Theme Park

Universal Studios is set to open its Nintendo-themed area on Feb 17, 2023. Rides and Nintendo merchandise are in the works.

2. The Nintendo Movie

This April, Nintendo is set to release a Nintendo-themed movie "The Super Mario Bros. Movie". As an interesting side note, Nintendo acquired an animation studio last July as well. Future movies could be made that will generate long-term revenue streams. The trailer can be viewed here and I must say when the "cheap-cheap" jumped out in the trailer, I flashed back to avoiding those jumping fish from Super Mario Brothers on my Nintendo as a kid but enough memory lane.

3. Nintendo Next Generation Console

With the Switch rapidly approaching the 6-year launch mark, the possibility exists that in late 2023 (or 2024) Nintendo will announce a new console. Even slipping to late 2024, eventually Nintendo will announce its new console, possibly setting up a repeat stock performance that the Nintendo Wii launch brought. Digressing it is interesting that AMD designs and makes the APU (think of this as a CPU and a GPU combined) for the Microsoft ( MSFT ) Xbox and powers the Sony ( SONY ) PlayStation. Meanwhile Nvidia ( NVDA ) supports the Switch via its Tegra line of SOC chips.

Saudi Arabia Is Taking a Stake in Nintendo

It should be noted that Saudi Arabia is taking a stake in Nintendo via its 6.07% ownership (an increase of over 1%). Saudi Arabia is pretty smart, and I watched them take a stake in AMD ( AMD ) handsomely profiting from the warrants.

Nintendo Financials

No investment idea is complete till you glance at the company's financials. Nintendo looks very healthy per Google Finance . Revenue and Net Income are high but slightly decreasing (the above projects might help reverse this). Profit margins are increasing. Looking at the balance sheet it appears stable.

Nintendo Dividend

The dividend that Nintendo pays out is variable but roughly you should expect 3-4% in dividend payments.

Conclusion

Nintendo has plenty of catalysts that may generate small gains in the stock price short-term such as the theme park and movie. This will increase exposure to younger children which could correspond to additional sales for key titles such as Mario and Zelda. Factor in additional sales from merchandise such as authorized t-shirts and figurines. This bodes well for financial results assuming Switch sales remain strong till a console refresh occurs. The variable dividend payment is a nice perk; this figure fluctuates quite a bit year to year based on profits.

It also appears that the supply chain woes that plagued Nintendo have been resolved to some extent. Nintendo is ramping production of the Switch.

Lastly, eventually Nintendo will start to release data on its next generation console. Starting too early and they might bite into existing sales, so do not expect much chatter on this topic till Oct of 2023 (at the earliest in our opinion) but eventually they have to upgrade. We made large profits on the cycle to the Wii and with the above catalysts Nintendo might be one to add for the short-term potential gains along with the dividend and the console upgrade.

Note: NTDOY is an ADR and represents 1/8 of a share of NTDOF.

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