Spotlight Stock: Activision Blizzard (ATVI)

November 3, 2011

So, what should you buy today? To my friend–the one who wanted to buy Netflix–I suggested the Spotlight Stock from the latest Dick Davis Investment Digest: Activision Blizzard (ATVI).

Activision Blizzard owns and publishes three huge video game titles–Starcraft, Call of Duty, and the enormously popular World of Warcraft–in addition to many smaller games. The titles have been popular among gamers for ages: Call of Duty is on its eighth version, and World of Warcraft is the world’s most popular online multi-player role-playing game. But the stock is just being discovered by investors … as attested to by the fact that ATVI has recently been recommended by (or put on the watch list of) no fewer than four of the investment newsletters we review for the Digests. If you picture the bandwagon of this company, it would have few people on it, but many climbing on board.

And the company is in a great spot (the stock is not the company, but good news from the company can make investor perception improve). Many of its games require subscriptions, and subscription revenue is growing as a percentage of Activision Blizzard’s income. That’s good news because the profit margin on subscriptions is higher than the margin on the initial sale of the game (the game DVD or download itself).

But the real story here is one of investor discovery. Like Netflix back in 2008, Activision Blizzard is already a great company–that most investors haven’t given a second glance. But I think they’ll be taking a good look soon–and now may be the time to get on the bandwagon.

You could buy ATVI here and hope for the best or you could read the full write-up in the most recent Investment Digest by clicking here now.

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