This post is part of a featured report on stocks in the Chinese online gaming sector.
"For our latest recommendations, we're fishing in the strongest sector, China," says Timothy Lutts.
In The Cabot Stock of the Month advisory, the stock advisor looks at Shanda Interactive (NASDAQ: SNDA), a leading players in the Chinese online gaming sector.
"Global video game software revenues hit $26.5 billion in 2008, just a hair behind the film industry's $26.7 billion. The largest market for video games is still North America, but it's a slowing market, growing at 17% last year.
"By contrast, the Chinese market is growing at a 28% annual rate-and is expected to continue to grow at a 20%-plus rate for years to come, as more and more Chinese are able to afford computers. The Chinese gaming market totaled $2.8 billion last year.
"Shanda, founded in 1999, gets 83% of its revenues from serious role-playing games that demand a lot of time (like the two mentioned above) and 13% of it revenues from casual games, like chess and Go.
"Its serious titles include 'Latale,' 'Dungeons and Dragons Online,' 'Fengyun Online" and 'AION,' which just launched in April and by some reports already has more than a million users.
"Like NetEase, it has no debt. Most impressive of all from our perspective is the companies' growth. Both boast rapid growth of revenues and earnings, as well as plump profit margins and increased analysts' estimates for both 2009 and 2010.
"And both boast excellent charts, which have recently hit new highs. NTES is most impressive, and our technical analysis tells us the new uptrend can run a lot further. We also think SNDA is an attractive buy."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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