Like others have said, it's hard to say what stocks you should buy, because it depends so much on your risk profile and your holding period.
Instead of a blanket "what should I buy" it would probably be better to ask us about specific stocks.
You mentioned NTDOY.
Instantly, I would be very cautious of stocks trading on the pink sheets. But this is Nintendo, a very well known company, not the type of company that is usually find on the pink sheets so I would be more willing to take a chance on it. (For those who don't know pink sheets are an over the counter securities, not traded on exchanges like the New York Stock Exchange or NASDAQ, indicated by the .pk or or .ob at the end of the ticker). Probably trading on the pink sheets because it's a foreign company. Because of this, might not be able to really see/compare their financials, but I'm comfortable moving on.
I like to compare a company to it's competitors. This is difficult for Nintendo because nobody does exactly what Nintendo does. Microsoft and Sony do so much more and are in so many other industries it's hard to compare, as well as other companies who just make video games but no hardware like Konami, Namco, Activsion, Electronic Arts, etc. This I don't really like too much because I like to compare apples to apples, not oranges. Just based on names I know that trade on an American exchanges or OTC I have a list of 8 stocks. Nintendo, Sony, Microsoft, Activision, Electronic Arts, THQ, Take Two, Konami.
I'd probably quickly scratch Electronic Arts and THQ off the list since neither has made money in the last 3 years. (Unless you think one of these companies is going to have a major hit coming soon that will make them profitable, but other companies like Midway and Acclaim are both in bankruptcy, so just having hit games isn't enough to keep video game companies from going under). Now I got 6 stocks.
Compared to these other stocks, Nintendo has the 2nd best earnings per share at 1.86 (2nd to Microsoft's 2.32). Nintendo's P/E is in the middle of the pack at 18.35 (Microsoft is the lowest/best at 12.08, while Sony and Activision are at the high end at 35.68 and 38.25). Enough to make me take a closer look at Nintendo.
Tried to pull up their 10k and 10Q reports (their annual and quarterly reports), couldn't, it doesn't appear they publish them (which is probably why they're on the pink sheets and not the NYSE or Nasdaq). Found their annual report on their website though:
http://www.nintendo.co.jp/ir/pdf/2010/annual1003e.pdf(their next annual report should be coming out in a couple of months though). Not the usual style I'm used to. Looks like positive trends from 2005 to 2009 in the major areas, then a slight decline in 2010. Would like to see 2011's number which should come out in next few months. If you want to invest in them, read their annual report. Compare to competitors.
Things I like about Nintendo:Seem to have dominated the casual gamer and the under-12 gamer market very well, while their biggest competitors focus more on the series gamer.
Seem to have a loyal following.
Nice library of games and exclusive titles (mario, zelda, etc.)
Long history of success (for the video game world)
Dominate player in the hand-held market
Things I don't like:Wii has peaked. Do they have any other consoles in the pipeline? Will there be a next generation Wii? Also with XBox and Playstation now entering the motion-controller marker with superior hardware could seriously hurt Nintendo.
Nintendo has always been the dominate hand-held player. But I'm concerned this market is on the decline as cell-phones and tablets eat away at market share. Will Nintendo 3DS be a hit? Personally I don't think so, but I don't really know video games, last hand-held I owned was a first generation GameBoy.
With current economic outlook, it is believed the industry will hold on to the current generation of consoles longer, rather than sink money into the next-gen system. I'm worried about the Wii's decline here. It seems like most people I know who have a Wii have the few key games (like Wii Sports, Wii Fit), but aren't big gamers. So I think this may hurt Nintendo's revenues in the next couple of years. I think people who own PS3's and XBox's are more hardcore gamers and will keep buying games, where the Wii's casual gamer is done buying games. From the people I know who have a Wii, it seems like more of a fad, a fad that is on the decline.
OverallLike others have said, buy what you know. If you love Nintendo, buy all their systems, think the 3DS will be huge, think the Wii has tons of life left. Then I'd probably buy.
Personally I probably wouldn't buy now though, because I think the Wii and handheld market are on the decline, and I'd rather they were listed on the NYSE or Nasdq (for uniform standards and reporting purposes). I'd probably wait till the next generation product is closer to launch, and if I think it would be a huge success, then I'd probably buy. If I owned the stock, I'd probably hold it, but I don't think I would buy it.