Hot Stock: Activision Blizzard Inc
Game Stop reported a same store sales increase of 10.2% in December. During the 2008 holiday period, total sales were $2,856.0 million, a 22.3% increase from the prior year of $2,334.6 million.This is significant. Sales for consumer goods declined in December. On a relative basis, computer and console gaming products were healthy. A number of key products from Activision in particular made the top sellers list:
Call of Duty: World at War
Guitar Hero World Tour,
Blizzard Entertainment's World of Warcraft
In the chart I posted above, the stock is at a cusp of rallying. Downside risk is still at $8.10 in the short-term. But the upside is $11.91. If I were a consumer who had the choice between dressing comfortably in ragged clothes among friends dressed the same to play these games, or shopping for clothes and high-end goods when I expect prices will keep falling, I would choose the former.
When the company reported its results in November, the numbers were healthy. I expect this to remain the case for the current quarter.
My short-term target price for ATVI is therefore $11.91, a potential 32% return.
