4-Star Stocks Poised to Pop: Take-Two

Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video game publisher Take-Two Interactive (Nasdaq: TTWO  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Take-Two's business and see what CAPS investors are saying about the stock right now.

Take-Two facts

Headquarters (Founded)

New York City (1993)

Market Cap

$697.5 million

Industry

Multimedia and graphics software

Trailing-12-Month Revenue

$1.08 billion

Management

CEO Ben Feder
CFO Lainie Goldstein

Return on Equity (Average, Past 3 Years)

(7.5%)

Cash/Debt

$180.5 million / $100.4 million

Competitors

Activision Blizzard (Nasdaq: ATVI  )
Electronic Arts (Nasdaq: ERTS  )
Microsoft (Nasdaq: MSFT  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 93% of the 1,198 members who have rated Take-Two believe the stock will outperform the S&P 500 going forward. These bulls include All-Star TMFBreakerTAllan, who is ranked in the top 2% of our community, and AlphaCenturion.

A few short months ago , TMFBreakerTAllan reminded Fools that Take-Two "has created successful game franchises year after year." Our CAPS All-Star continues: "The value of the existing games likely exceeds current pricing. And with that, more acquisition rumours and/or offers will be made."

Take-Two's consistently negative returns on equity and top-line declines don't exactly make it a typical Foolish pick. However, with valuable franchises and some of the brightest developers in the business, Fools are drawn to Take-Two for its untapped potential. Take-Two's Grand Theft Auto is among the most successful video game franchises of all time (outselling even Microsoft's Halo and Activision's Call of Duty), while its 2K label has given EA serious headaches in the sports segment.

Of course, with the company continuing to lose money, CAPS members like AlphaCenturion believe Take-Two is a prime target for someone else to turn around:

They have the best developers in the videogame industry. Period. There is no reason it shouldn't be a hugely profitable label given the right resources and proper management. I would buy [Take-Two] as a potential takeover target, not as a business. How long you would have to wait for that is a question due to the current state of the industry, but [Take-Two] has been targeted before and chances are it will happen again especially with Icahn being among the top holders.

What do you think about Take-Two, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Take-Two is a Motley Fool Rule Breakers pick, Electronic Arts is a Stock Advisor selection, and Microsoft is a choice of Inside Value. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool's disclosure policy always gets a perfect score.


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