Another Reason Why You Should Buy Take-Two Interactive

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By Jacob Maslow

Grand theft auto poster in Paris metroThere are many reasons for picking a particular stock. Of course, you need to pay attention to price per earnings ratio. You also need to pay attention to market positioning, product mix, diversification, debt level, and other classical indicators of intrinsic value.

These are all well and good. However, you can sidestep a lot of those heavy-duty data analysis and simply pay attention to one key factor. This key factor is actually a shortcut to all that research. How? If you pick stocks based on this factor, you are basically piggybacking on the research made by the people behind this factor.

What factor am I talking about? Hedge fund portfolio inclusion. That’s right—if you look at all the stocks in the NASDAQ or New York Stock Exchange and pay attention to stocks that hedge funds like and go long on, you’re already doing your research. You only need to research which stocks have a lot of hedge fund shareholders, and you can piggyback on their research. You’re simply reverse engineering all the hard work and analysis these hedge fund managers did.

Based on this metric, Take-Two Interactive Software (NASDAQ:TTWO) is a solid buy. This company has a 52-week range of $18.45 to a high of $30.80. Currently, it’s trading at around $24.57 to $24.96. Let’s round that up to $25 per share.

Based on its historical range as well as its favorable analyst earnings revisions, it’s understandable why hedge funds load up on this stock. Don’t get me wrong, I’m not saying that the stock is all good news. In terms of sales growth, earnings growth, and earnings momentum, it’s not doing so well compared to other stocks. Still, if you look at potential earnings surprises as well as earnings revisions, this is a stock worth looking at. Moreover, the fact that it’s being held by a large number of hedge funds should give you somewhat of an indication of the potential upside with this stock.

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