Electronic Arts Inc (EA)

This company is changing the way we are doing things. The industry is going from console gaming into more of the mobile gaming. Have done a very good job of transitioning to that revenue source. Have also done well by reducing the number of games that they issue yearly, and increasing the quality. Also, have a partnership with Disney (DIS-N) in creating Star Wars games. Trading just slightly below the 200 day moving average. It has been a long-term mover and has done very well. Buy this on Dips.

They produce entertainment software for PCs, tablets and home video game consoles. Have done very well because the industry is moving from the physical console gaming to more of the digital gaming space. Mobile gaming revenues should continue to climb as consumers continue to buy and spend more on smart phones and tablets. This has done very well by having fewer types of titles out, rather than “60 something” titles. They are really focused on quality control. Has a partnership with Disney to produce games that are based on Star Wars. Trading at 21X forward earnings with a 14%-15% growth rate.

The time to buy electronics is not the 4^th quarter. You should buy from March to May or all the way through to September. We have resistance from end of September. This stock has rolled over. There is not much that is appealing to this right now.

Had been following this for some time and bought it during the August correction. They have been able to do really very well with the games that they have. Trading at a bit of a premium at 24X earnings, and you are getting about a 12-15 times growth rate. But this is the premier name in this particular space. They are moving well into the mobile space as well. Earnings are just climbing, climbing, climbing.

This would mirror the consumer discretionary sort of, particularly the retail sector. Without having done a seasonal analysis on this, his guess would be that this would actually mirror something to do with retail coming into the 4^th quarter. Retail has a specific seasonality, which goes from Oct 28 to Nov 29, Black Friday. A good time to be getting into this would be October 28. A caution is that the retail sector has a strong trend of pulling off just after Black Friday.

Just bought this week. It came down to the 100 day moving average. They are blowing away earnings estimates every single quarter. You are paying a little bit of a premium, but this is certainly a premium name.

This company sells something that is not that expensive and that people get hours and hours of use out of, so there is a very good value proposition. They have the strongest franchise in video games by far. Have all of the big Madden football, FIFA soccer, etc. These are games that people renew almost every year. Right now the market is in the midst of a console transition to PlayStation 4 and Xbox 1. Historically the 3^rd year of that transition is the strongest year and we are headed into that year. The market is moving to an online sales model, so people are buying these games and upgrades digitally as opposed to going into a store. This means the company gets a much better profit margin. They’ll generate close to $1 billion in cash in 2016. They are going to release the new Star Wars game. Initially said they were going to sell 1 million copies, but have now updated that to about 11.5 million copies.

The trend is great, scores in the top 10% on momentum and the valuation is still pretty good at 36% ROE. Has a solid balance sheet with no net debt, they actually have cash. In their most recent quarter, they beat earnings. This still has room to run.

This has done extremely well. A very strong earnings and beat in the last several quarters. Has outperformed its nearest competitors. There is a sector shift from traditional gaming console games into the more digital space. The one concern is that they just lost the person in charge of that, to Nintendo. They have a partnership with Disney (DIS-N) to create games surrounding the upcoming Star Wars video. Looks like an interesting name.

The consumer has more money in their pockets now. EA-Q has a broad range of customers from young to old. They will now spend more money in gaming. Now more and more sales are being done online so that a retailer is being cut out. The customers are repeat customers, constantly upgrading their games. Their business model is changing and their margins are going higher.