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Why Activision Blizzard Is Poised to Keep Rallying

By Brian D. Pacampara, CFA - Apr 24, 2013 at 10:23AM

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Market-trouncing returns could be written in this 4-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video game giant Activision Blizzard (NASDAQ: ATVI) has earned a respected four-star ranking.  

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

Activision facts

Headquarters

Santa Monica, Calif.

Market Cap

$16.2 billion

Industry

Home entertainment software

Trailing-12-Month Revenue

$4.9 billion

Management

President/CEO Robert Kotick

CFO Dennis Durkin

Return on Equity (average, past 3 years)

8.3%

Cash/Debt

$4.4 billion / $0

Dividend Yield

1.3%

Competitors

Electronic Arts 

Sony 

Take-Two Interactive

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 97% of the 7,133 members who have rated Activision believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, Googlespooch, succinctly summed up the bull case for our community:

Despite labor problems in the past and the issues of beating out smartphone/tablet games, I believe that Activision Blizzard is well positioned to continue to exert dominance in the gaming sphere. They have consistently been able to get high quality games released every year like clockwork without sacrificing the integrity of the titles.

In addition, they occupy a position as one of the largest game developers, which gives them access to more resources to produce even better games. In addition, their competition has been weak lately with companies like EA hitting stumbling blocks.

Finally, I think that it is overly zealous to claim that smartphones and tablets are going to kill console gaming. ... In the end, I seriously think that Activision Blizzard will be able to overcome the current forces and prosper. Besides, they have a decent dividend to reduce short pressure.

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Stocks Mentioned

Electronic Arts Inc. Stock Quote
Electronic Arts Inc.
EA
$131.52 (1.98%) $2.55
Sony Corporation Stock Quote
Sony Corporation
SONY
$88.88 (2.08%) $1.81
Take-Two Interactive Software, Inc. Stock Quote
Take-Two Interactive Software, Inc.
TTWO
$124.76 (1.39%) $1.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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