Electronic Arts Inc. (EA), Activision Blizzard, Inc. (ATVI), Take-Two Interactive Software, Inc. (TTWO): This Game Maker Is Positioned for Growth

Activision Blizzard, Inc. (NASDAQ:ATVI) recently announced that it is buying back 85% of Vivendi‘s stake in the company. The buyback is worth $5.8 billion. Activision Blizzard would pay $4.6 billion in debt and $1.2 billion in stock. The shares have soared on the news, pushing the valuation higher. Activision Blizzard, Inc. (NASDAQ:ATVI) decided to use the low debt rates while they are still available.

Who would benefit the most from the rise of the new generation of platforms? I think that Electronic Arts Inc. (NASDAQ:EA) would be the biggest winner. The company’s series stand well to gain from the upcoming consoles, as gamers would be testing their beloved franchises on new hardware. Activision Blizzard has more PC-oriented titles. This is a problem as PC sales decline quarter after quarter. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has fewer titles than its peers to present, as it is a much smaller company.

The only problem with Electronic Arts is that the stock has risen significantly. There has been no significant pullback so far. Analysts’ mean target price suggests a 7% downside for the company, as well as a 5% downside for Activision Blizzard. At the same time, they are bullish on Take-Two Interactive Software, Inc. (NASDAQ:TTWO), suggesting 16.5% upside.

Bottom line

I think that Electronic Arts is well positioned to profit from the emergence of new gaming consoles. The stock has appreciated fast, so it would be better to wait for a pullback before taking a position in the company.

Activision Blizzard shares have recently soared. While the buyback is bullish for the company, the stock has run up too far too fast. An investor must consider waiting for a pullback before taking a position in the stock.

Take-Two Interactive is the cheapest company if judged by forward P/E. However, it has to show some solid growth to gain further. Until then, the stock would lack direction.

The article This Game Maker Is Positioned for Growth originally appeared on Fool.com.

Vladimir Zernov has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Take-Two Interactive . The Motley Fool owns shares of Activision Blizzard. Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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