Stocks for Video Game Enthusiasts: Activision Blizzard, Inc. (ATVI) and More

Page 1 of 2

Despite the popularity of mobile gaming and the perception that traditional console video games are dead, video game makers have enjoyed a great start to 2013.  In addition, a positive catalyst in the form of the new generation of consoles may be in the works for the end of 2013. As a result, the great run enjoyed by companies in the video game industry may still have legs.  If that’s the case, here are a few stocks that may be poised to profit handsomely.

Activision Blizzard, Inc. (NASDAQ:ATVI) has a $15 billion market capitalization and holds a portfolio of popular titles, including Call of Duty and World of Warcraft.  On Feb. 8, the company released quarterly results that beat expectations, as sales increased 7.6% versus the prior year.  The higher sales were driven by strong holiday sales of the hit title Call of Duty: Black Ops II.

Activision Blizzard, Inc. (NASDAQ:ATVI)

Meanwhile, net income nearly quadrupled from the year-ago period.  As a result, shares soared 11% on the day.  Furthermore, the company forecast first-quarter and full-year profits of $0.10 and $0.80, respectively.  The stock is currently trading at slightly less than 17 times fiscal 2013 earnings of $0.80 per share.

Electronic Arts Inc. (NASDAQ:EA) is a $5 billion company with video game franchises including Battlefield and The Sims.  In early February, Electronic Arts reported that revenues over the first nine months of the year declined nearly 7% year over year.  In addition, the company slashed its fiscal 2013 earnings forecast because of weak demand.

Electronic Arts appears to be overvalued compared to Activision Blizzard. EA’s stock is trading for a trailing price-to-earnings ratio of over 30 and a forward P/E of 15 at recent prices.  Despite the company’s struggles, the stock is off to a great start to 2013, rising almost 20% to begin the year.  Investor optimism may be driven by the fact that the company has several planned sequels of its popular titles to be released this spring, including new installments of the Battlefield and Crysis titles.

GameStop Corp. (NYSE:GME) is a retailer of new and used video games and video game accessories that might be better-suited to value or dividend investors.  The company carries a $3 billion market capitalization.  The company is a new entrant into the dividend-paying stock category, having announced its first payout one year ago. However, the company increased its dividend by a robust 67% after only two quarterly payments.

At recent prices, the stock yields 4%. GameStop trades for a forward price-to-earnings ratio of 7.5, perhaps struggling to overcome the notion that brick-and-mortar retailers are the modern-day buggy whip business.

The Bottom Line

Despite the worries surrounding the traditional video game industry, help may be on the way later this year.  Rumors suggest that Sony Corporation (ADR) (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT) will soon announce next-generation consoles for their PlayStation and Xbox platforms.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!