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Thursday, July 07, 2005

Navarre's Little Understood Secular Trend (NAVR)

This article from discusses an emergent trend that could benefit Navarre enormously: the rise of Anime as a cultural phenomenon. I don't personally dig Anime, but there are plenty of people who do and the content is creating big bucks. Navarre's purchase of FUNimation puts them squarely in the middle of this secular trend as FUNimation is a leading content developer of Anime content.
Navarre is a stock that I follow as a part of my "Growing Acculturalization of America" trend. I believe that the racial make-up of America is changing drastically due to Asian and Hispanic immigration, and I want to invest accordingly. If the Anime trend has additional legs and continues to grow, then Navarre's FUNimation buy will look extremely smart. Beyond being a driver for sales, it will improve Navarre's margins as well. Their current distribution business averages about 15% with the FUNimation business coming in around 30%. If that holds, Navarre's income could improve drastically. Considering how little the Street likes this stock, it could be a great contrarian play.


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