Is Nintendo A Good Video Game Stock To Add To Your Portfolio?

white Xbox controller

Nintendo (NTDOY), a dominant player in the home entertainment products space, boasts influential franchises such as Mario and the Legend of Zelda. Given the positive outlook for the video game space, we think NTDOY is positioned to continue gaining.

Japanese consumer electronics and video game company Nintendo Co. Ltd. (NTDOY - Get Rating) has advanced  26.6% over the past three months. This impressive performance has been driven largely by the growth in demand for the company’s products during the holiday season, and the company’s ability to meet the rising demand for video games amid the COVID-19 pandemic.

The stock closed yesterday’s trading session at $80.95, 1.9% below its 52-week high of $82.55, which it hit on December 17.

We think Nintendo  is  positioned to hit fresh highs in the near term based on its great lineup of games. Also, NTDOY is expected to introduce new hardware and software products that could further bolster demand for its Nintendo Switch console.

Here are the factors that we think could shape NTDOY’s performance in the near term:

Favorable Industry Outlook

The video games industry has been growing at a decent clip  over the past few years. But its growth is expected to  accelerate going forward due to  increasing adoption of digital entertainment and its ongoing  product innovations with the help of new  technology.

According to a report by Grand View Research, the global video game market is expected to grow at a CAGR of 12.9% from 2020 to 2027. As a top player in the space, NTDOY should benefit significantly from the industry tailwinds.

‘Nintendo Switch’ is Driving Growth

The company’s game console ‘Nintendo Switch’, which was launched in March 2017, has proved to be a blessing for NTDOY. The company also launched the ‘Nintendo Switch Lite’ in September 2019; it is designed specifically for portable play.

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