Adobe Systems Incorporated (NASDAQ:ADBE) has received a lot of attention as it has reported solid progress in subscriber growth. The company does seem more expensive than Xerox. With Xerox out of the limelight and a story that will unfold over the next few years, it is more attractive to me than Adobe Systems Incorporated (NASDAQ:ADBE), which is in focus right now. A substantial decline might be a good entry point for Adobe, but Xerox is fine to jump into now. Just keep in mind that it will decline if the overall market declines. That shouldn’t scare you away.
Low cost and repeatable
Unlike traditional DLC, which can cost quite a bit to develop and people tend to buy once, the micro-transactions in a collectible card game make each individual into an unlimited buyer. You can never have enough boosters.
Booster packs cost the company nothing and can bring endless joy to shareholders, though being priced at $1 per pack seems very reasonable. Once complete, these games are not as hard to maintain or add to as World of Warcraft. Turnover is high, but so is the longevity of the product.
The number of cards and gameplay mechanics available can be expanded over time to keep the game fresh, and its casual nature can keep people playing longer at a lower level of intensity. Look no further than Magic: The Gathering to understand the variety and longevity of these type of games. Free-to-play is the direction that gaming is going in, and it is nice to see Activision Blizzard, Inc. (NASDAQ:ATVI) getting involved.
The company has no debt and a lot of cash, but growth concerns me. This free-to-play game offers interesting possibilities, but I would only keep an eye on it. I want to see how the game performs after the beta is over, and then I will consider my options. I get the sense that World of Warcraft’s good years are behind it, and that is a concern.
Conclusion
Xerox seems like a good choice if you have the patience to wait. It probably will not explode, but consistent gains are possible. Adobe Systems Incorporated (NASDAQ:ADBE) would have been a good choice a few months ago, but now waiting for a better entry point seems like a better idea. Activision Blizzard, Inc. (NASDAQ:ATVI) was a favorite of mine, but I am not sure what will keep growth moving along. You will have to wait for Hearthstone, Ghosts, and Destiny to determine if Activision Blizzard, Inc. (NASDAQ:ATVI) can remain the great company that it has been in the past.
Nihar Patel has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Adobe Systems. The Motley Fool owns shares of Activision Blizzard. Nihar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Should You Invest in These Cash Cows originally appeared on Fool.com is written by Nihar Patel.
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