Activision Blizzard, Inc. (ATVI), Mattel, Inc. (MAT): Buy These Consumer Stocks

A high bar, however, has been set for these titles. In the fourth quarter, Activision Blizzard, Inc. (NASDAQ:ATVI) yet again exceeded consensus. The good results were propelled by high sales of the Skylanders toy game and Call of Duty Black Ops 2 during the holidays. For the 2012 fiscal year, the company recorded net revenue of $4.86 billion on a GAAP scale compared to $4.76 billion on a similar scale in 2011.

Going forward, I see the company as an undervalued grower. It trades reasonably at a respective 13.3 times past and 14.1 times forward earnings, with a dividend yield of 1.3%. Analysts forecast a 9% annual EPS growth rate over the next five years, which I think is actually low in light of it being more than 650 basis points below the rate that was achieved in the past five years. With a free-cash-flow yield of 7.2%, no long-term debt, and a beta of 0.55, Activision Blizzard, Inc. (NASDAQ:ATVI) is a safe investment with plenty of upside potential.

Conclusion

With Microsoft and PlayStation getting ready to launch their new consoles, all eyes will be on the video-game market. Investing in a company as consistent as Activision Blizzard, Inc. (NASDAQ:ATVI) provides exposure to the market while hedging against the uncertainty of a new launch. By contrast, Mattel, Inc. (NASDAQ:MAT) — while still an incredibly safe investment — is more of a play on innovation.

The article Buy These Consumer Stocks originally appeared on Fool.com and is written by David Gould.

David Gould has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard (NASDAQ:ATVI), LeapFrog Enterprises (NYSE:LF), and Mattel. The Motley Fool owns shares of Activision Blizzard and LeapFrog Enterprises. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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