Let me tell you about what's going down.
Shares of Gateway
If you haven't checked up on Gateway lately, let me be the first to warn you that the company has struggled since its eMachines purchase. These days, Gateway shares trade for a buck or two and change. A couple of years ago, Gateway had enough cash on its balance sheet to buy itself out at today's price twice over. Unfortunately, it's peddling a product that is out of favor until Microsoft's
A week ago, billionaire investor Carl Icahn filed a report indicating that he had recently scooped up a piece of Take-Two Interactive
Gateway? Take-Two? Are you kidding me? Even their mothers are disowning them, yet you have seasoned investors gobbling them up and asking for seconds. As the tagline for NBC's new Ugly Betty sitcom goes, "Ugly is the new beautiful."
Ugly is the new beautiful
There's nothing wrong with boring stocks. Some of the biggest gainers coming out of the Motley Fool newsletters make plain vanilla yogurt appear chancy. One of Philip Durell's biggest winners over at Motley Fool Inside Value is an accounting software company. Over at Motley Fool Hidden Gems, a pizza oven maker has baked enough dough to become a refreshing 4-bagger since Tom Gardner's initial recommendation nearly three years ago. Intuit
Working in favor of Gateway and Take-Two is that we don't really need to guess on the catalysts needed to awaken interest in these companies. By early next year, folks will be upgrading their computers as a way to get Vista preinstalled and to harness its new features. With talk of computer manufacturers using upgrade vouchers to keep holiday business brisk and giving customers the chance to trade up to a new system early, a rebound at Gateway may come as early as next quarter.
Take-Two's recovery may take a little more time. Yes, the new PlayStation 3 and Nintendo Wii are hitting the market before the seasonally potent holiday season, but video game software titles don't peak until the console has been on the market for a few years with a larger installed base. It may not take a total turnaround to get the stock back on track, though. Take-Two's stock has been cut in half over the past year. The pessimism is so thick you can cut it with a butter knife.
Hope is a four-letter word
Seducing the unloved may seem like a heartbreaker approach to investing. A stock's precipitous dive does not make it cheap. Only the gumption to spot the catalysts that will get the company's nose pointed in the right direction again makes it cheap.
If you want to be heartened by Gateway's potential, consider the Hewlett-Packard
And if you think all of the video game publishers have been toast this year, THQ
Opportunities are always out there for the taking. Both Intuit and Microsoft are Inside Value picks, and the newsletter is always serving up monthly potential prom dates for corsage-wielding investors.
So, you think you've had it with these Motley Fool stakes on the Motley Fool plain? Don't kid yourself. That's where the fun is waiting to be had.
Longtime Fool contributor Rick Munarriz does have a pair of Gateways in his house, though he favors working on his HP computer and Dell monitor. He does not own shares in any of the companies mentioned in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.