"He who is not everyday conquering some fear has not learned the secret of life." - Ralph Waldo Emerson
The post-election pull back continues Thursday, as it looks like another down day in the markets. The silver lining, of course, is that stocks are a lot cheaper than they were just a week ago. For those investors prudent enough to keep a high amount of cash on hand prior to the re-election of President Obama, there are a lot more equities in the bargain bin. One stock that I have traded successfully over the years that looks like its ripe to pick up again is Activision (ATVI).
Activision Blizzard publishes online, personal computer, console, handheld, and mobile interactive entertainment worldwide.
Eight reasons ATVI is undervalued at $10.50 a share:
- The company just announced its game, "Call of Duty: Black Ops II" had more pre-orders in its first day than its massive hit, "Call of Duty: Modern Warfare 3" sold last year when it sold $400mm on its first day. Actual sales numbers have not been revealed as of this writing.
- Activision has over $3B in net cash on its books (over 25% of market capitalization).
- The mean analysts' price target held by the 14 analysts that follow the stock is north of $14.50 a share, more than 35% more than the current price.
- The stock is selling at the very bottom of its five-year valuation range based on P/E, P/CF, P/S and P/B.
- The stock has a five-year projected PEG of less than 1 (.94).
- The company has beat earnings estimates for 12 straight quarters. The average beats over consensus during the last four quarters have averaged 40%.
- ATVI sells for just over 10x forward earnings, a discount to its five-year average (17.1).
- It has solid long-term technical support at these levels (see chart below):
Disclosure: I am long ATVI.