This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
"The video game industry provides the best entertainment value per dollar and has generally been considered a recession resistant industry," says Asif Suria.
In his SINLetter, the advisor looks to the newly combined game maker Activision Blizzard (NASDAQ: ATVI) as his top investment idea for the coming year.
"October video game retail sales increased 18% year-over-year and software sales jumped a whopping 35% to $696.8 million. November proved to be another good month with both overall and software sales up 10% and 11% respectively.
"However looking at the stock of industry leader Electronics Arts, which has lost more than 70% since the start of this year, this hardly seems to be case. Competitor Take-Two Interactive fared a little better but still lost more than half its value over the same time period.
"In contrast, the recent merger of Activision and Vivendi's Blizzard division has created a gaming powerhouse that not only has a series of best-selling games on the market right now including 'Guitar Hero World Tour' and 'Call of Duty: World at War' but also has a very interesting pipeline of games including the highly anticipated 'Starcraft II.'
"Blizzard's online game 'World of Warcraft' is estimated to have more than 10 million active players worldwide and its recent expansion pack 'Wrath of Lich King' sold 2.8 million copies within the first 24 hours after launch in mid-November.
"Unlike certain private equity transactions that burden the balance sheets of the companies they are acquiring with debt, Vivendi put $1.7 billion in cash into the newly formed company. Activision Blizzard plans to use $1 billion of which will be used for a stock buyback.
"The company beat analyst expectations when it reported third quarter results with revenue coming in at $711million ahead of expectations of $632.14 millions and earnings excluding special charges of 7 cents per share. With the stock off almost 35% so far this year and expectations of 2009 earnings of $1.20 per share, this high growth company looks very attractively valued.
"With a founder still at the helm of the company who is a fan of Warren Buffett and a Berkshire Hathaway stock holder, I can rest assured that the interests of management are very much aligned with that of shareholders. As disclosure,note that I hold ATVI both in my personal portfolio and in my model portfolio."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
1-01-2009 @ 9:58PM
WoW Gold said...
Oh wow. The new evil empire is raking in the dough.
I wonder if they're also dipping in wow gold sales to fuel their World of Warcraft machine?