Midway Games Inc. (MWY), maker of the gory but popular "Mortal Kombat" as well as "Cruis'n USA" titles, also gets a nod from Fagin even though the company has disappointed of late. Three weeks ago, Chicago-based Midway said earnings for its fiscal fourth quarter ending June 30 would be well below expectations, and the stock plunged 17% that day alone.
When that happens, "investors turn the stock into a 'show-me' story. Nonetheless, its fundamentals are still strong going into the next fiscal year," Fagin said. Also, Midway followed its lousy earnings report with plans to buy back up to 1 million of its shares over the next year.
Another game maker that's fighting for investors' respect is Acclaim Entertainment Inc. (AKLM), which is recovering from "two years of huge losses that brought the company to the brink of bankruptcy," according to the Value Line Investment Survey, a stock-research service.
The company, based in Glen Cove, N.Y., has been cutting costs, launching successful games ("NFL Quarterback Club") and paring its losses. But there's questions about whether Acclaim can extend its recovery, and analysts' ratings toward the stock are decidedly mixed.