INVESTING: After the iPhone, will Apple try a video game device?

My son wants a portable PlayStation. Or a GameBoy. Or anything he can fit in his hand and play video games on and be like all the other kids in the hood. And if he goes all summer with great behavior and a good attitude, he probably will get one.

The other night during dinner, my wife asked if Apple makes a video game player. No, I answered, but I have to believe Steve Jobs is working on it, and it could be the next big release after the iPhone is on cruise control.

In the video game world, there are three main players: Sony with the PlayStation, Nintendo with the Wie, and Microsoft with Xbox. Microsoft is the newest entry, and in only a few years has captured billions of dollars in business. Sony and Nintendo sell hand-held versions of their devices, but Microsoft hasn’t released a portable device yet. We most likely will see one soon, and it should do well.

But what about Apple? It’s arguably the most hip company in the world. Yet it has nothing going on in the video game market. The iPod was such a hit that it will be difficult to follow that up with the new phone.

Despite enormous expectations, the phone will help the company grow. And with a 39 price-to-earnings ratio, Apple doesn’t have to keep doubling sales in order to keep the mojo behind its stock.

On Feb. 13, when Apple was trading at $85 a share, I wrote that it could hit $110 this year. I was wrong. It’s already above $120. And that’s all from iPhone hype. Now that the phone is out, I wouldn’t be surprised if the stock has a hangover for a while. But Jobs has gained a well-earned reputation for keeping Apple fans coming back for more, and I think a video game player will be his next surprise.

If Apple gets in the market, you can be sure the device will be slick and easy to use. That means people who otherwise might not think about playing video games will give it a try. My wife and son would not be downloading music if not for the iPod. Apple took a marginal niche market and made it mainstream. I would expect the company to do the same thing in video games.

I’ve long felt Apple could be one of the few tech stocks still hanging around on the final high day of this bull market. Things seem to be lining up to keep the momentum alive for at least another six months, and possibly a little longer.

Maybe when the company announces a video game player, the news will be as good as it could get for one company, and that will be the time to sell. Right now, though, it’s probably worth overlooking a short-term dip in light of the longer-term potential.

The general stock market has been consolidating for a month now. We experienced a few 2-percent to 3-percent corrections and rallies in June, with not much to show for our efforts. The sectors we’ve been concentrating on-energy, industrials and materials-continue to outperform, although only by a small amount. I believe there is still more upside left to this bull market, and I would continue to use any temporary weakness as an opportunity to add to positions in the above-described sectors.