This Is the Secret Best Way to Catch Profits From Pokemon
Unless you've been living under a rock or on some remote desert island, odds are you've heard about Pokemon Go at some point in the last two weeks.
The app, which features licensed characters by Nintendo (NTDOY) , is the first popular augmented reality game to hit mobile phones. Unless you're training your Pokemon to battle at a local gym, all you really need to know about that is that it uses your phone's camera and GPS systems for interactive gameplay wherever you are.
Investors are trying to hop in on this trend and make some quick profits. But the game was developed by a small, private company. Where are the steadiest profits to be made?
The obvious answer would be with Nintendo itself, but this is not correct. Nintendo developed the Pokemon characters for its games, television shows, and films, but Pokemon Go was created by Niantic Labs, a spinoff of Alphabet. Niantic will receive the lion's share of the profits, while Nintendo will just collect royalty payments -- and these are not expected to amount to much. It is true that investor sentiment toward Nintendo has soared since the release of the game, bringing the stock to new highs, but these are not sustainable.
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Other analysts have been pinpointing Zagg (ZAGG) - Get Report as the best way to play the Pokemon craze. This company manufacturers cellphone accessories and purchased battery case maker Mophie this year for $100 million. The company's backup battery cases have proven popular and are an essential when on a power-draining Pokemon hunt. Zagg's stock has soared by more than 25% in the last week as the game has taken off. But it's still not the safest way to play the fad.
Instead, look toward wireless carriers for the best Pokemon-related profits.
The nature of the game has players taking to the streets and public parks to rack up points. This means each player is using a lot of mobile data, which in turn means that many users will be either paying overuse penalties on their cellphone accounts or upgrading to accounts with larger data allowances. Either way, it's a win-win for the mobile companies.
And the strongest wireless carrier today is Verizon (VZ) - Get Report . The company is the country's largest carrier, and it's also been the top performer in its class. Year to date, Verizon's stock has seen a lift of more than 20%, versus the S&P's 4% increase.
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Verizon is also a savvy player in the midst of thick competition. The other mobile carriers, including Sprint (S) - Get Report and T-Mobile (TMUS) - Get Report have been waging a price-cutting war to attract new customers, but Verizon recently successfully raised its prices while adding benefits. The company is clearly the most trusted among U.S. carriers.
That makes this company a solid bet and a stock you can continue to count on for profits long after the recent Pokemon fad has died away.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.