Shares of video game giant Activision Blizzard jumped more than 10% on July 11 after a federal appeals court refused a Federal Trade Commission request to block Microsoft's bid for the video game maker. Activision held onto that 10% gain and continued climbing. On Tuesday, the Relative Strength (RS) Rating for Activision stock rose from 76 to 81, passing a key milestone.
Activision Stock May Soon Be Gone
The upgraded 81 RS Rating puts Activision stock in the top 19% of all stocks for price performance over the past 12 months. It's a bullish indicator. Decades of market research shows that the top-performing stocks typically have an RS Rating of at least 80 as they begin their biggest runs. The proposed merger with Microsoft has cleared several hurdles. So the question could quickly become: Do you want to buy some Microsoft stock?
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Activision stock has risen more than 5% past an 81.22 entry in a first-stage cup with handle, meaning it's now out of a proper buy zone. Look for the stock to create a new buying opportunity like a three-weeks tight or pullback to the 50-day or 10-week line. On Tuesday afternoon Activision stock was down fractionally.
Turnaround Last Quarter Amid Merger Talks
Taking a look at top and bottom line numbers, Activision Blizzard has posted improving EPS and revenue numbers in each of the last three reports. Earnings soared 72% to $1.10 per share last quarter, reversing from a 23% decline in EPS the prior quarter. Revenue grew 35% last quarter to $2.38 billion, up from 8% growth the prior quarter. Unless the merger goes through, Santa Monica, Calif.-based Activision Blizzard is expected to report its next quarterly numbers on or around Aug. 2.
Activision stock earns the No. 3 rank among its peers in the Computer Software-Gaming industry group. Much smaller SciPlay, which makes a line of casino-type games among others, is No. 2. Another small player, South Korea-based Gravity, is No. 1 among the group's highest-rated stocks.
As you try to find the best stocks to buy and watch, be sure to pay attention to relative price strength.
IBD's unique Relative Strength Rating tracks market leadership with a 1 (worst) to 99 (best) score. The score shows how a stock's price performance over the last 52 weeks compares to all the other stocks in our database.
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