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
blog comments powered by Disqus
Insider Monkey Headlines
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

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!