5-Star Stocks Poised to Pop: Activision Blizzard

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Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video game giant Activision Blizzard (Nasdaq: ATVI) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Activision's business and see what CAPS investors are saying about the stock right now.

Activision facts

Headquarters

Santa Monica, Calif.

Market Cap

$15.18 billion

Industry

Home entertainment software

Trailing-12-Month Revenue

$4.37 billion

Management

CEO Robert Kotick (since 1991)

CFO Thomas Tippl (since 2008)

Major Franchises

Guitar Hero, Call of Duty, X-Men, StarCraft, Warcraft, World of Warcraft

Cash / Debt

$2.83 billion / $0

Competitors

Electronic Arts (Nasdaq: ERTS)

Take-Two Interactive (Nasdaq: TTWO)

CAPS Members Bullish on ATVI Also Bullish on

General Electric (NYSE: GE)

Johnson & Johnson (NYSE: JNJ)

CAPS Members Bearish on ATVI Also Bearish on

Amazon (Nasdaq: AMZN)

Citigroup (NYSE: C)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 98% of the 4,540 members who have rated Activision believe the stock will outperform the S&P 500 going forward. These bulls include All-Star jamespeer, who is ranked in the top 15% of our community, and Sweetsonic.

Late last month, jamespeer peered into Activision's near term:

Rock solid financials. Number 1 games producer in the world. I am expecting a huge Q4 for Activision with Modern Warfare 2 coming out, [PlayStation 3] price cut, and of course sales will naturally soar over the xmas period.

In a reply pitch from last week, Sweetsonic dives deeper into the pipeline:

I'm actually really surprised that [Activision] is not trading way above its current value. It's true that the WOW and Guitar Hero series' will not last much longer, but look at their other prospects. COD: Modern Warfare 2 will be out this holiday season -- speculated to be the biggest selling video game ever. If that news doesn't bring them up in Q4, I don't know what will.

My biggest disappointment in the company is actually on the Blizzard side of things. The production delays on Starcraft 2 and Diablo 3 are puttin' a hurt on the image of the company. However, I think if they can pull it together by Q2 2010, we should see some real growth. [Activision] really has the potential to fly ahead of every company in this industry.

What do you think about Activision, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Activision, Electronic Arts, and Amazon are Motley Fool Stock Advisor picks. Take-Two is a Rule Breakers recommendation, and Johnson & Johnson is an Income Investor choice. The Fool's disclosure policy always gets a perfect score.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 09, 2009, at 10:39 AM, Broken196 wrote:

    If you don't like the sound of game delays you'll be seeing red for as long as you own this stock. Blizzard is notorious for delaying titles. It has never hurt the company before and many players respect the "when it's ready it's ready" mentality Blizzard prides itself on. Other great developers that use that philosophy are Bioware and Valve BOTH owned by EA. Another being Square Enix.

    Let's not forgot Blizzard does not drive the Activision ship alone. Thankfully this distances ATVI from one trick ponies like TTWO.

  • Report this Comment On September 09, 2009, at 10:44 AM, wumingbo wrote:

    I have to disagree with Sweetsonic. Blizzard has always operated this way with their release dates. It's not the shareholders they cater to, but the consumer. Blizzard has always come out with quality. They usually don't post release dates until they are very close to completion, but if a release date is ignored because it's in the way of quality, so be it. They have proven this method over and over again with the overwhelming success of every product. A christmas release date has nothing on having a reputation for the greatest games in the world. I believe this is the biggest difference between them and EA, who goes for volume and games that the consumer will only care about for a month. If you look at all the games that Blizzard has come out with for the last 20 years, people are still playing them to this day! Perhaps Sweetsonic is dissapointed because they cannot simply purchase ATVI for 3 mo's before selling them off. Call be brand loyal, but I like the way Blizzard does business.

  • Report this Comment On September 09, 2009, at 12:05 PM, mikecart1 wrote:

    ATVI will be the next MSFT in about 10 years. Anyone not in, is out.

  • Report this Comment On September 09, 2009, at 3:17 PM, hoobler wrote:

    I agree that guitar hero is losing steam, however Blizzard is still making (and selling) expansion packs for WoW; in fact, a new expansion was just announced (no release date yet though...). These expansions will keep the monthly subscription fees rolling in. WoW isn't new, but I don't think it's going anywhere any time soon either!

  • Report this Comment On September 09, 2009, at 7:40 PM, Varchild2008 wrote:

    MSFT rallied HUGE this year... Mikecart1

    Outperformed MSFT February 5th 2009.

    Up 36.5% since then.

    So.... ATVI up 36.5% in 2010 off the sales of COD: Modern Warfare II + Starcraft II ???

    That would be: $15.91

    Standard and Poor's 12 month target price? $15.00

    Hmm I like the odds.. I like the chances...

    I'll take the 36.5% annual gains starting in 2010 while I create bigger profits off of trading BIOTECH plays.

  • Report this Comment On September 10, 2009, at 8:52 AM, Sweetsonic wrote:

    I was a little hard on Blizzard I admit. But I really do think that the delay (again) of the Starcraft II release is affecting investor sentiment. And as a player, I'm also anxious to get my hands on the products, and I think others feel the same way. I have all confidence on ATVI to continue producing great games and lead the industry. But I'd like to see some major releases by Q2 to keep the stock soaring through 2010.

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