THQ (NASDAQ: THQI), arch competitor of Activision Blizzard (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS), closed under $10 per share on Monday; $9.90 to be exact. It hit a new 52-week low of $9.30 intraday. I've got to admit, THQ under $10 a share sparks my interest.
I also must concede that my interest might be a bit on the irrational side to some degree. After all, I was a big fan of THQ during the time oh so long ago when all its cylinders were firing and the stock was a pretty cool investment. Now that it's hit the magical spectrum of single-digit, does that event alone changes things on a fundamental level? Am I just looking for a reason to buy a stock I once liked and praised?
As of late, problems have befallen THQ. Questions about the quality of its pipeline and delays of key video-game product have plagued the publisher. Indeed, THQ was a weakening company and a weak stock. Why invest in THQ when Activision Blizzard exists? There's definitely sound logic to such thinking. However, THQ is around book value at $10 per share. And the fact that THQ has some cool intellectual properties at its disposal (Destroy All Humans!, Saint's Row, etc.), as well as a cool licensing partner in Viacom (NYSE: VIA) and its Nickelodeon characters, means you've got to figure that the company might start becoming a value at some point.
What I'd say on THQ is keep it on a watch list. Don't be in a rush to buy. Do some due diligence (as an example, a quick check of the latest 10Q from August shows that the publisher was using cash for operating activities instead of generating cash from them, which isn't terribly encouraging). Even at under $10 per share, I recognize that the market is headed lower and that the economy is awful. I would expect even better prices on THQ shares in the near future.
Disclosure: I own Activision Blizzard; positions can change at any time.
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Reader Comments (Page 1 of 1)
10-07-2008 @ 3:46PM
Stockpreacher said...
Yes, I agree with you it is worth to buy ThQI when the price drop at 8.10.