Why Nintendo Stock Rocked the Market Today

Investors were happy to play with Nintendo (NTDOY 2.96%) shares on the first trading day of the week. Shares of the Japanese video game giant rose nearly 3% on the day after an analyst initiated coverage with a resounding buy recommendation. This rise came on a generally down day for the market, as highlighted by the benchmark S&P 500 the index slips by almost 1%.

It started from an unambiguous purchase

The initiating party was TD Cowen forecaster Doug Creutz, who opened his Nintendo coverage with the aforementioned buy recommendation and a 10,600 yen ($71.25) price target on each of the company’s Japanese-listed shares.

In his research note launching coverage, Creutz dug into the video game mainstay’s history as a publicly traded company. Nintendo’s latest video game console should be released in the next seven to 15 months, he wrote, and the months leading up to the console’s release have traditionally been an ideal time to buy its stock.

“Since 1994, in periods that are within a year of a home console release (before or after), a total window of 10 years, Nintendo stock has outperformed the market by a cumulative 524%,” he pointed out.

Past performance does not guarantee etc.

As investors, we should never buy a stock expecting past trading patterns to repeat themselves. However, Creutz also had solid fundamental reasons for his Nintendo buy recommendation; in his opinion, the company has been able to keep the quality of its games high, allowing it to consistently record high-margin sales for its products.