Video Game Stock Could Heat Up Before Summer

Electronic Arts stock tends to outperform in the second quarter

Apr 1, 2019 at 1:34 PM
facebook X logo linkedin

The shares of video game maker Electronic Arts Inc. (NASDAQ:EA) ended the first quarter with a gain of nearly 29% -- their best quarter since the end of 2014. What's more, EA stock could extend its 2019 rally over the next few months, if recent history is any indicator.

Specifically, the maker of the "Apex Legends" and "Battlefield V" games has been among the best S&P 500 stocks to own in the second quarter of the year. EA has averaged a quarterly gain of 10.79%, and ended higher eight of the past 10 years, per recent data from Schaeffer's Senior Quantitative Analyst Rocky White.

Electronic Arts stock is up 1.4% at $103.09 today. The shares have rallied roughly 39% since their Dec. 26 low of $73.91, with recent pullbacks contained by their 40-day moving average, though upside momentum has stalled in the $105-$108 area. Meanwhile, the $103 area represents a 38.2% Fibonacci retracement of EA's decline from its July 2018 closing high to the aforementioned lows. Another 10.79% second-quarter surge from current levels would place EA around $114.21 -- territory not charted since October.

EA stock chart April 1

Despite the security's outperformance last quarter, a handful of analysts remain skeptical of EA. Currently, 32% of covering brokerage firms maintain tepid "hold" ratings, leaving the door open for potential upgrades to drive future gains. Likewise, the consensus 12-month price target of $102.37 represents a discount to current trading levels. Another strong second-quarter performance could also trigger price-target hikes.

Meanwhile, EA sports a Schaeffer's put/call open interest ratio (SOIR) of 0.62. While this ratio indicates that call open interest outnumbers put open interest among options expiring within three months, it registers in the 92nd percentile of its annual range. This mean that near-term options traders are more put-biased than usual right now. An exodus of short-term option bears could also be a boon for Electronic Arts.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI