The gaming industry looks promising — and one of the top video gaming companies recently appeared on our latest stock screen, notes Mark Skousen, growth stock expert and editor of Five Star Stock Trader.
Activision Blizzard (ATVI), the Los Angeles-based electronic gaming and multimedia company, is seeing consistent and rising profits.
The company’s core franchises include Call of Duty and World of Warcraft. Call of Duty's mobile version enjoyed more than 300 million downloads in the past year. It plans to launch in China soon, and 50 million consumers already have pre-registered for the game.
The company's other big franchise, World of Warcraft, rolled out new content, Shadowlands, in November and it is now the fastest-selling video game in history.
Over the past year, revenues have jumped 52% to $7.7 billion, and earnings have tripled to $2.2 billion. The stock price has moved up, hitting an all-time high today, but is still selling for only 26 times expected earnings into 2021.
Profit margins exceed 29%. The gaming company has $7.6 billion in cash and only $3.6 billion in debt. It has adopted a rising dividend policy since 2010 and is expected to increase its dividend (paid annually) when it reports earnings in early February. It has beaten Street expectations four quarters in a row.
JPMorgan Chase recently raised its price target on the company from $95 to $101 per share. Let’s add Activision Blizzard to our portfolio and set a protective stop of $73 a share here.
