Electronic Arts (NASDAQ: ERTS) is one game play that's expected to weather the "frugal consumer" era reasonably well, hence I'm Reiterating my Buy rating for the company, first recommended on June 11, 2009 at a price of $21.87. Near-term, a great deal is riding on ERTS' signature franchises, Madden NFL and NCAA Football, and the company also will have to introduce a new, innovative game if it hopes to maintain momentum created by the earlier franchises. Given that downside risk, there's a Revised Sell/Stop Loss, up to $13 from $11. The First Call FY2010/FY2011 EPS estimates for ERTS are 93 cents to $1.20.
Technically, Electronic Arts' stock chart remains in an uptrend, but it has also been below the pivotal 50-day moving average for about two months: a caution sign. ERTS needs to rise and stay above that average, and obviously hold the $15 mark. Should it fall and stay below both the 50-day MA and the $15, that would represent a technical breakdown, hence the Sell/Stop Loss at $13.
Stock Analysis: Electronic Arts' is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in ERTS now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your ERTS position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $13.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
So long peak oil, here comes peak uranium
Black Friday expected to be strong, no promises for Christmas
Will JPMorgan chief Jamie Dimon be our next Treasury Secretary?
Add your comments