With the S&P 500 index up more than 18% across this year's trading, a new bull market might already be underway. But while some high-profile stocks are already setting new valuation highs, there are still promising investment opportunities flying under the radar. 

Despite enjoying some strong gains in 2023, the stock of video game publisher Take-Two Interactive (TTWO -0.17%) remains down roughly 28% from its high. Even better, the company has a massive performance catalyst on the horizon. Read on to see why building a position in the gaming leader's stock could be a path to scoring next-level returns.  

A dollar sign.

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Take-Two is quietly cooking up another huge hit

Take-Two is poised for explosive sales and earnings growth over the next couple of years. The company, which is best known for the massively successful Grand Theft Auto (GTA) franchise, is gearing up to launch the next entry in its blockbuster series.

No media or promotions for the upcoming game have officially been offered, but it looks like the publisher's Grand Theft Auto VI is on track for a 2024 release. Some strong performance for the upcoming sequel is already priced into the company's stock, but excitement for GTA VI remains relatively muted because so little is known about the game.

That will undoubtedly change before long, and investors have an opportunity to buy Take-Two stock in the lead-up to the release of what will likely go on to be one of this decade's biggest entertainment products.  

Ready for the next level

Grand Theft Auto is one of the world's most successful media properties. To put the significance of the series' upcoming installment into perspective, it's worth diving into the performance of the franchise's last mainline entry.

First released in September 2013, Grand Theft Auto V was an absolute game changer for Take-Two. The company recorded revenue of $5.35 billion in its last fiscal year, which ended March 31. By comparison, Grand Theft Auto V generated more than $1 billion in sales at retail in just its first three days on the market.

Granted, the company didn't get every dollar generated from the roughly 16.5 million copies of the game sold in its debut weekend. Retailers and console-platform makers also took their cut, but the title almost immediately became the fastest entertainment product in history to reach $1 billion in sales. At that point, GTA V was still just warming up.

While sales for many video games still tend to be highly front-loaded, the video game industry has also shifted to models that see product life cycles extended through online multiplayer modes and regular content updates. Grand Theft Auto V is the poster child for the kind of success that's possible with this approach.

Thanks to the appeal of the core game, the strength of the title's online mode, new content updates, and re-releases for new hardware platforms, GTA V managed to ship more than 180 million copies worldwide. Through unit sales of the game alone, Grand Theft Auto V reportedly generated more than $7.7 billion in sales for the company.

What's more, a pure focus on unit sales would actually be underselling the success of the game. The online mode included with GTA V is essentially a whole additional game, and one that has been enormously profitable for the publisher.

Through the sale of in-game currency that can be used to unlock items in Grand Theft Auto Online, the multiplayer mode has generated billions in additional high-margin revenue for Take-Two.

A smart buy before sales and earnings explode

With an estimated budget of $265 million for the initial release of Grand Theft Auto V, the title was an incredible profit driver for Take-Two. Granted, the company spent extra money developing updated versions of the game and content for Grand Theft Auto Online, but it made its money back on those investments many times over.

Now, the gaming leader is gearing up for a repeat performance with GTA VI

TTWO Net Income (TTM) Chart

TTWO net income (TTM) data by YCharts. TTM = trailing 12 months.

A quick look at Take-Two's earnings trajectory over the last couple of years might not be terribly inspiring at first glance. But it's important to keep in mind that the company has been pouring a large amount of money into the development of GTA VI and has yet to see any return on that investment.

According to some reports, Grand Theft Auto VI might have a budget of more than $1 billion and potentially as much as $2 billion. While there's no way to confirm this target and the latter figure seems high, GTA VI likely has one of the highest-ever budgets for an entertainment product. From a financial standpoint, it also stands a very good chance of being one of the most successful.

With Take-Two Interactive heading into its next big growth phase and shares still trading at a substantial discount compared to their high, the stock looks like a smart buy right now.