From Porter Stansberry in the S&A Digest:

One sector to buy immediately, according to our penny-stock guru Frank Curzio: video games. The Los Angeles Times reports sales of video games, consoles, and accessories fell 8% in 2009 to $19.66 billion. In the past two months, major video-game businesses Game Stop, Take-Two Interactive, and Electronic Arts sharply lowered earnings estimates.

I know it's counterintuitive to think "buy" when you hear this kind of news, but the video-game business has boomed over the last decade, thanks to faster computers, faster Internet connections, and better "peripherals" (devices like handheld controllers and headsets that attach to the main console). These trends are all going to continue. Video games will continue to get more and more of the consumer's entertainment dollar. And that makes the industry's current tough stretch a good chance to buy.

Says our Penny Stock Specialist editor Frank Curzio about the opportunity:

Some analysts believe the recession is to blame for weak game sales. After all, unemployment is greater than 10% and consumers are saving more than they spend these days. But the recession has nothing to do with weak video game sales. It is a lack of big hits. For example, video game megahit Call of Duty: Modern Warfare 2 was released in November. In just three months, sales topped a record $1 billion worldwide. Just like folks will go see huge movies like Avatar, consumers will buy video games - if the content is great.

In the coming months and into 2011, we will see a huge surge in video game content. Almost every publisher has blockbuster games in the pipeline. Also, the three video game companies mentioned above have strong balance sheets and expectations are low following their earnings warning. Buying video game stocks is a great low-risk, high-reward trade right here.

Penny Stock Specialist readers bought Take-Two on a 30% pullback back in December. In less than two months, we're up more than 25%. I see more upside as the latest installment of its Grand Theft Auto franchise will be released within 12 to 18 months. The last time Grand Theft Auto hit the markets, Electronic Arts offered to buy Take-Two for $26 a share. Today, Take-Two is trading at $10. Lots of upside here...

Crux Note: Frank Curzio's Penny Stock Specialist was previously only available to S&A Alliance subscribers, but is now open to new subcribers. If you like trading stocks under $10, you'll love Penny Stock Specialist. To learn more about Frank's service - and what's being called "The secret penny stock that supplies Apple" - click here.

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