Mad Money

Cramer: Videogame maker undervalued?

Gaming with Take-Two's CEO
VIDEO7:5107:51
Gaming with Take-Two's CEO

(Click for video linked to a searchable transcript of this Mad Money segment)

Quite simply Jim Cramer thinks the stock of this company should be higher.

The stock is Take-Two Interactive and the "Mad Money" host is convinced that investors have erroneously punished this video game maker after GameStop lowered its forecast and Best Buy released disappointing sales numbers.

"In both of those cases, the stocks had gotten too high off of repeated analyst upgrades, so when the companies stumbled, those stocks were eviscerated," Cramer noted.

That doesn't characterize Take-Two, at all, Cramer insisted.

Scene from 'Grand Theft Auto V'
Source: Rockstar Games

According to Cramer, as the maker of the popular game, the most successful game of 2013, Take Two should be knocking it out of the park.

Yet the Street isn't rewarding Take-Two at all.

"On September 17th, when released the latest version of Grand Theft Auto, Take Two was a $17 stock. Then, on October 29th, the company reported a spectacular blowout quarter, I mean just a colossal earnings beat with raised guidance to boot, and the next day it's trading at $17 and change. And that quarter only included two weeks of Grand Theft Auto! Fast forward to today, and the stock is still at $17.05."

"That's absurd!" Cramer exclaimed.

And he added that the company has other popular franchises, as well, that also warrant a higher share price.

"They also make BioShock, Max Payne, Civilization, Borderlands, and successful sports simulations like NBA 2K and Major League Baseball 2K," Cramer noted.

In aggregate, Cramer thinks all of these titles should be moving the needle.

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"This is a company that's been incredibly successful, yet its stock hasn't been rewarded for that success at all. That doesn't make sense, especially when you back out the cash on the balance sheet," said an aggravated Cramer.

"When I consider the accomplishments of Take Two Interactive, my favorite videogame maker and the lackluster price action, I'm honestly at a loss for words. Except this - it's absurdly cheap."

Call Cramer: 1-800-743-CNBC

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