The house rules are simple in this weekly column.

I bash a stock that I think is heading lower. I offset the sting by recommending three stocks as portfolio replacements.

Who gets tossed out this week? Come on down, Nintendo (NASDAQOTH: NTDOY.PK).

This is no love shack
The Japanese video game pioneer unveiled pricing and release dates for its upcoming Wii U video game console.

The pricing -- quite frankly -- is too high.

Nintendo will be charging stateside buyers $300 for the basic Wii U console. A deluxe model with more memory and accessories will set gamers back $350.

Talk about a blown opportunity. Nintendo is coming off its first annual loss in decades, and this could've been its way back into the limelight. The next generation of PlayStation and Xbox consoles is at least a year if not two away. Industry sales have been sluggish for three years, but this could've been a game changer.

It won't be. It's not just the $300 console. Folks clamoring for a second Wii U GamePad -- the bar-raising controller with a touchscreen -- will have to shell out a three-figure ransom. Older and cheaper controllers will do the trick, but not in an ideal manner for two-player games optimized for the GamePad. Can you imagine how many fights will break out in families with just one?

This isn't the first time that Nintendo has overpriced its hardware. It had to shave $80 off its fledgling 3DS handheld last summer, just a few months after it hit the market.

It didn't learn a thing, apparently.

When Nintendo Wii hit the market at $250, it was substantially cheaper than rival platforms. Now the Wii U will be more expensive than not only the PS3 and Xbox 360 but also the entry-level iOS and Android tablets, smartphones, and media players that young gamers are relying on for their rudimentary gaming whims these days.

Nintendo may not have had a lot of serious competition at $250 during the 2006 holiday shopping season, but it's going to have to overcome kids asking for cheaper iPhones and $199 tablets this time around.

Good news
As I do every week, I don't talk down a stock unless I have three alternatives that I believe will outperform the company getting the heave-ho. Let's go over the three fill-ins.

  • Apple (Nasdaq: AAPL): Did you see the new line of sleek Apple iPods introduced yesterday? The new iPod touch may be at the same $299 Wii U price point, but it also packs four times the storage capacity and access to hundreds of thousands of free or nearly free apps. Apple's products may be seen as bigger threats to Nintendo's handheld lines than its Wii U console, but why bet on the laggard when you can go with the company that has earned the right to be the world's most valuable tech company?
  • Netflix (Nasdaq: NFLX): An innovation with the Wii U is TVii, an interactive platform that makes live TV and video services including Hulu and TiVo (Nasdaq: TIVO) more engaging. Netflix is part of TVii, and investors are better off going directly with the leader in premium video for their portfolios. Netflix is now serving up more than a billion hours of video streams a month to its 27.6 million streaming customers worldwide. Netflix and Nintendo are both coming off rough years, but the smarter play here is the growing company. TiVo is another strong consideration given that it's increasing its subscriber count again, but Netflix gets the nod as the misunderstood company trading for less than its domestic operations alone are worth.
  • (Nasdaq: AMZN): If the Wii U is a hit, the leading online retailer will fare well selling them and also collecting marketplace revenue from folks paying a premium through third-party Amazon retailers if supplies run low. If the Wii U isn't a hit -- and that will likely be the case -- Amazon will be there to sell them the stuff that they will be buying. Analysts see revenue and earnings climbing 31% and 42%, respectively, at Amazon next quarter. It's the better place to be.

Wii? U? Get your pronouns in order, Nintendo.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.