Activision Could Score Traders Double-Digit Profits

ATVI has almost closed a breakaway gap, giving investors an opportunity to buy under $17

Activision Blizzard (ATVI) — This company publishes online, PC, console, handheld and mobile interactive entertainment products worldwide. Analysts projected a decline in the industry’s growth rate, and Activision’s earnings were estimated to fall to $0.88 in 2013 from $1.18 in 2012.

But new Sony (SNE) PlayStation 4 and Microsoft (MSFT) Xbox One consoles open the door for profitable revisions of already successful games like Call of Duty, Skylanders, World of Warcraft, StarCraft and Diablo. And, more importantly, the recent purchase of Vivendi’s 61% controlling interest in Activision knocks Vivendi’s ownership down to just 12%. This purchase removes a prior lid on the stock.

On July 26, the stock jumped 15% on the Vivendi announcement, leaving a breakaway gap from $15.42 to $16.86. But market action and profit-taking have almost closed the gap, giving investors an opportunity to buy the stock under $17 with a trading target of $22. Long-term investors could hold for a much greater return.

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