2 Reasons Activision Blizzard Investors Should Ignore the Destiny Debacle

Activision Blizzard (NASDAQ: ATVI  ) shares have lost more than 12% of their value since Sept. 3. Destiny, the video game publisher's much-anticipated first-person shooter, generated hundreds of millions of dollars in sales during the first few days following its release, but critical reviews have been less than stellar.

Currently, Destiny holds a 77 rating on Metacritic, a review aggregator. Although a 77 suggests a generally positive reception, it's quite disappointing for a game of Destiny's caliber. (Some context: In its legal agreement with developer Bungie, Activision had included a clause allowing it to terminate the Destiny publishing deal in the event that Bungie's then prior game, Halo: Reach, did not score at least an 80.) With plans for three sequels and several major digital expansion packs, the long-term financial consequences of a disappointing debut could be severe.

Still, there's reason to like Activision: Beyond its staple franchises like Call of Duty, the company appears to be sitting on two, largely unappreciated, potential blockbusters.

Hearthstone has quietly racked up 20 million players
Although its rivals have managed to capture the general population's attention with hit mobile games like Plants vs. Zombies and Candy Crush, Activision has been reluctant to embrace the mobile gaming trend. In the past, CEO Bobby Kotick has explicitly downplayed the long-term potential of mobile gaming, defending Activision's commitment to traditional console and PC games.

Until now, Kotick's logic has largely been sound -- the history of mobile gaming is one of relatively short-lived fads. Once seemingly mighty franchises like Angry Birds have been tossed aside by new games and new business models. Yet Activision appears to be sitting on what could become the most consistently profitable mobile game ever -- Hearthstone: Heroes of Warcraft is unlike any other mobile game that has come before it.

For the last few months, Hearthstone has existed in sort of an open beta period -- though it's officially been released, it hasn't seen widespread availability on mobile platforms. The game is clearly designed for touch controls, but has primarily been confined to traditional PCs. Admittedly, Hearthstone was released for some models of the iPad back in April, but has not made its way to the far more popular iPhone or Android platforms.

But that will change soon -- the game's lead designer told video game publication Joystiq that Hearthstone would make its way to all major mobile platforms by the end of the year. Despite being limited to the PC and iPad, Hearthstone has already attracted 20 million players, and its popularity could grow exponentially when it finally arrives on iPhone and Android.

Like other popular mobile games, Activision's Hearthstone is free-to-play -- instead of charging for the title upfront, Hearthstone is monetized with in-game transactions. But unlike many other popular mobile games, these transactions are largely optional, and do not affect one's ability to play the game. With Hearthstone, there's no sense of "pay-to-win," which may be why the game has attracted generally glowing reviews (currently, the PC version holds an 88 on Metacritic). At the same time, a competitive, semiprofessional scene has sprung up around the game -- something no other mobile game has experienced.

Despite the fact that payment is optional, Activision's management has said Hearthstone could generate as much $100 million in revenue per year. That number, however, could be woefully understated -- Activision moved away from the $100 million estimate on the company's last earnings call, noting only that the game had far exceeded their expectations. Rather than another flash in the pan, Hearthstone could emerge as a reliable cash cow for the company for many years to come.

Activision takes on the MOBA
Heroes of the Storm is Activision's second potential blockbuster, and like Hearthstone, it's also free-to-play. Rather than a mobile game, however, Heroes is clearly a traditional PC title -- one aimed at the tens of millions of MOBA fans.

The MOBA, or multiplayer online battle arena, is a relatively new genre of video game that has seen its popularity grow exponentially in recent years. The genre's two most popular titles -- Dota 2 and League of Legends -- have tens of millions of players and generate hundreds of millions of dollars in revenue. In fact, League of Legends was one of the top grossing free-to-play game last year, bringing in over $600 million.

Both games have large and rabid fan bases, with big professional scenes and tournaments with multimillion dollar prize pools. The recent, near $1 billion, sale of Twitch may not have happened if it weren't for these games -- they're consistently the most commonly streamed on the service (Hearthstone often comes in third).

Heroes of the Storm has no set release date -- it's currently in closed alpha testing. There's no guarantee that it will generate League of Legends-like results when it does launch, but the opportunity is certainly there for a billion dollar franchise. It will face tough competition, but Activision's Blizzard studio is well-known among the PC gaming community -- its past games, including World of Warcraft, Starcraft, and Diablo III, are among the top-selling PC games of all time.

There's more to Activision than Destiny
It can't be ignored -- Destiny's poor critical reception does not bode well for Activision's future. Still, there's much more to Activision than Destiny. With shares down so significantly since the game's release, Activision investors may be overreacting -- and overlooking a pipeline of games that could be poised to deliver stellar results.

Apple Watch revealed: The real winner is inside
Apple recently revealed the product of its secret-development "dream team" -- Apple Watch. The secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see where the real money is to be made, just click here!

Harley-Davidson recalls all 2014 Touring motorcycles

Harley-Davidson is recalling all 2014 Touring bikes, including the Road King, pictured here. NEW YORK (CNNMoney) Harley-Davidson is recalling about 126,000 motorcycles over a problem with the clutch that could cause crashes.

The recall applies to all model year 2014 Touring bikes, including the three-wheeled trikes and custom designed bikes.

Last October, Harley-Davidson (HOG) recalled a smaller number of 2014 Touring motorcycles for an issue with the same part.

The hydraulic clutch may not disengage and the bike could crash, likely by tipping over, spokeswoman Maripat Blankenheim said.

Harley-Davidson has connected 19 accidents and no serious injuries to the issue. Several of the accidents occurred during the company's safety testing, she said.

The fix involves rebuilding the master clutch cylinder and takes less than an hour.

Owners were sent a letter about the recall in the last week.

Separately, the company is recalling about 1,400 Street bikes for a possible fuel tank leak. No injuries or accidents were reported.

The models are the 2015 XG500 and XG750.

The company said dealers would inspect the tank, determine if it is faulty, and, if necessary, order a replacement tank.

  Hear the new electric Harley-Davidson

Stocks: Sell Rosh Hashanah, Buy Yom Kippur?

This year has been terrible for seasonal strategies. Sell in May and Go Away? You would have missed out on a 6.5% return in the S&P 500. Avoid the stock market during a mid-term election year? You would have missed out on a 9.2% return. So much for seasonality.

Romina Hendlin

But with markets weakening ahead of Rosh Hashanah, the Jewish New Year, maybe it’s time to think about selling before the High Holiday. In a post from Sept. 7, the blog Humble Student of the Market explains why it’s taking that maxim seriously this year:

…the strategy of adopting the Wall Street adage of sell Rosh Hashanah, buy Yom Kippur may not be a bad idea. Bespoke showed the profitability of such a strategy in 2011. Though the sample size is relatively small, the strategy did show a negative bias in equity returns during such a period.

Even though I am not a big fan of seasonal trading strategies, my wild-eyed guess is that at least the “sell Rosh Hashanah” part (on Sep 24) of the strategy may be a decent bet this year. For the moment, I remain cautiously long the market.

Here’s a chart of the returns from sell on Rosh Hashanah/Buy on Yom Kippur going back to 2000, courtesy of Bespoke Investment Group:

What You Need to Know Before Buying Vivint Solar's IPO

Vivint Solar has patiently waited to go public and now that SolarCity (NASDAQ: SCTY  ) has done the dirty work educating the market on solar and the market is near all-time highs, it's time to cash in. Blackstone Group, whose affiliate owns Vivint Solar, recently filed an updated S-1 that proposed raising as much as $426 million in Vivint's IPO, valuing the company at $1.9 billion.

The question for investors is: Will this be the next SolarCity, which is up 368% since its IPO, or just another overhyped stock? Before Vivint Solar hits the market, let's take a closer look at what the company is.

Residential solar systems built by SunPower. Image source: SunPower.

What you need to know
Vivint Solar is a residential solar installer and has a lot of similarities to SolarCity, the market leader in residential solar, but also some key differences. It's from that baseline that I'll look at the company.

Both companies primarily sell residential solar-power systems through long-term leases, capturing value by financing and owning the systems themselves. This allows them to use scale to sell and install systems, lowering costs for themselves and consumers.

Image source: Vivint Solar.

There are also some key differences in how Vivint Solar and SolarCity go about their businesses. SolarCity is constantly vertically integrating its business, buying racking maker Zep Solar and solar panel manufacturer Silevo, among other acquisitions. Vivint has maintained close supply relationships with a small number of suppliers like Enphase Energy, which is its sole inverter supplier. This allows Vivint to standardize components, but it doesn't pull the product entirely into its business. Essentially, SolarCity is trying to own the entire supply chain and Vivint is specializing in sales, installation, and financing.

Sales strategies also differ between Vivint Solar and most of its competitors. Vivint Solar uses a similar direct sales strategy as its parent company, going door-to-door selling solar-power systems. This concentrates installations into small regions of the country like Massachusetts, where Vivint Solar is the market share leader. It has also resulted in a lot of turnover in the sales staff with 43% of workers leaving between the beginning and end of 2013.

Another key to understand is that Vivint Solar and SolarCity have only recently begun crossing paths in the markets they serve. Vivint Solar started expanding its business on the East Coast while SolarCity began serving the West Coast. From that perspective, competition between the companies has been low, something that will be interesting to watch as they grow across the country. 

SolarCity workers install a residential solar system. Image source: SolarCity.

Can Vivint Solar upset the solar industry?
Vivint Solar has built up a 9% market share in the residential solar market in a little over two years, which is an incredibly fast pace. It is also gaining steam, more than doubling installations in the first half of this year to 56.8 megawatts. With an addressable market of over 91 million homes, or about 456 gigawatts given an average system size of 5 kW, the residential solar industry is just getting started. Given the fact that it only has strong roots in six states it could expand quickly across the country.

For investors, the Vivint Solar IPO isn't a slam dunk, especially if the $1.9 billion market cap holds. SolarCity's market cap has fallen to $5.7 billion and would be a safer bet given its scale and cost structure. The company also lost $56.3 million last year and another $69.2 million this year, and the retained value model it is pushing has a long way to go to prove long-term profitability.

But the opportunity in solar is immense and Vivint Solar is just getting started. I think a basket approach to the industry is wise with other leaders like SolarCity, SunPower, and First Solar included in your portfolio, but Vivint Solar should be considered among the industry leaders, and it'll be a big player in this industry for years to come. 

Apple Watch revealed: The real winner is inside
Apple recently revealed the product of its secret-development "dream team" -- Apple Watch. The secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see where the real money is to be made, just click here!

Could McTablets Help McDonald's Start Paying $15 an Hour?

Alamy McDonald's (MCD) is not in a good place these days, with sales slumping, quality concerns rising, and activists pushing for it to start paying its employees a living wage. It's against this backdrop of McDespair that a radical tech-fueled test may be the ticket to giving customers and some -- but not all -- employees what they want. The world's largest burger chain is expanding a test that started in two stores in California's Orange County where patrons could build customized gourmet burgers using tablets -- but still heading to the cashier to ring up the sale. The test is expanding this month in geography -- to two stores in San Diego -- and in scope. According to U-T San Diego, the new experience is upscale and convenient. Customers use the touch-screen devices to assemble gourmet burgers with 20 toppings like guacamole and garlic aioli and two roll choices (artisan or brioche). The cost? $5.49 plus tax. "Bacon, the only extra that costs extra, adds 80 cents," U-T San Diego reported. But, wait, there's more: The tablets now allow customers to scan credit and debit cards so orders are processed right away. Guests don't have to wait by the counter. Employees bring orders to the table on metal baskets. Employees bus the table afterward. In short, this tablet test finds McDonald's behaving more like a fast-casual chain or gourmet burger shop than the struggling fast-food behemoth that it is today. Take Two Tablets and Call Me in the Morning Folks who want to order meals outside of the custom-built upscale sandwiches still have to hit up a cashier. However, it's not much of a stretch to see these tablets eventually being able to handle the entire menu. A single person troubleshooting questions or tech issues can replace an army of cashiers. If McDonald's is able to run efficiently with fewer employees, couldn't it take these savings and give "Fight for $15" activists what they want: better wages for the folks whom they do keep around? In its present state, McDonald's can't afford to pay $15 an hour without dramatically boosting its prices. However, the one-two punch of tablets that can give the chain the flexibility to reduce its staff while also encouraging customers to spend more could make McDonald's the darling instead of the dog that it is in the eyes of the public. McDonald's would get some grief from the unions pushing for higher wages by scaling back on its staffing requirements, but automation is already taking place. McCafe smoothie orders are fulfilled at the touch of a button. Cups are put into a carousel that are filled with drive-thru soft drink orders. If McDonald's could do more with less -- and pay more along the way -- the public would likely approve and applaud the process. However, even if the automation push falls flat, it's easy to see how tablets could get customers to spend more -- another result that could give McDonald's franchisees the leeway to reward their front lines without the potentially negative backlash of trimming its headcount. McTech the Future McDonald's has become ground zero in the battle to increase wages in the fast-food industry. It's the country's largest burger chain, making it a logical poster child. It's not entirely fair. As rich as McDonald's may be, 80 percent of its restaurants are owned by independent franchisees that don't have the legal flexibility in their current operations to roughly double starting wages. However, if the tablets get folks to spend more and provide the means to lower optimal staff counts, it would be a real game changer for a company that needs to reinvent the rules. This will likely be the first year in over a decade that McDonald's comparable-restaurant sales decline. Consumer polls are unflattering to the quality of McDonald's food and its brand. If McDonald's can lead the way to $15 at a time when competitors can't, won't it also help draw the industry's best workers to McDonald's? Won't it help with retention? Won't this buzz generate a more positive opinion of a company that's already taking steps to improve the quality of its menu? McDonald's may not be a tech giant now, but a fleet of tablets can change that in some pretty dramatic ways. More from Rick Aristotle Munarriz
•Week's Winners and Losers: Netflix, Microsoft Get Worldly •Here's Why Marriott Should Be Reminding Us to Tip the Maid •5 Reasons to Play the Dave & Buster's IPO

The Next Blue Chip Stocks: Kinder Morgan Inc

Source: Kinder Morgan 

Kinder Morgan Inc (NYSE: KMI  ) is the third largest energy company in North America. It owns an interest in or operates 80,000 miles of pipelines. That's enough to circle the earth more than three times. Needless to say it's a massive company. And yet, few people outside of the energy or investing world have even heard of Kinder Morgan. However, despite the fact it's a relatively unknown company Kinder Morgan really is the type of blue chip stock that could anchor an investor's portfolio. 

What are blue chip stocks?

Blue chip stocks are large, well-established and financially sound companies that have been around for a long time. A blue chip stock is typically a market leader and has a reputation for quality, reliability, and profitability in good times and in bad. Blue chip stocks also typically are well-known and pay a dividend. The bluest of the blue chip stocks make up the 30 members of the Dow Jones Industrial Average.

What makes Kinder Morgan a blue chip stock?

When we read that overall description of a blue chip stock we could easily be describing Kinder Morgan. It's already the third largest energy company in North America by enterprise value, behind just ExxonMobil (NYSE: XOM  ) and Chevron (NYSE: CVX  ) . It's also the largest midstream company in North America and as the following slide shows it's the market leader in several key energy infrastructure segments.

Source: Kinder Morgan Inc Investor Presentation. 

Not only is it a market leader, but most of its revenue and profits are very secure as it operates a toll road-like, fee-based business. This enables it to profit even if the prices of the commodities it transports fall. The stability of Kinder Morgan's profitability enables it to pay a very secure and growing dividend. In fact, the company's dividend is projected to grow faster than most other blue chip stocks, as the following slide points out.

Source: Kinder Morgan Inc Investor Presentation. 

If there is anywhere that Kinder Morgan falls short of other blue chip stocks it's the fact that it's not quite a household name yet. Consumers can't pull up to a Kinder Morgan branded gas station and complain about the price of gas, even though Kinder Morgan is likely getting its cut somewhere along the value chain as it transports more gasoline and other petroleum products than any other company in the country. Still, the fact that its brand isn't as well known by consumers doesn't really matter since Kinder Morgan's customers are energy companies that need to transport natural gas and oil-based products and these companies keep coming back and asking Kinder Morgan to expand its empire even further.

This is why the company is sitting on a $17 billion pipeline of identifiable future organic growth opportunities. That's a massive opportunity set for a $140 billion company to keep growing in the years ahead. Moreover, given the oil and gas boom in North America, there are plenty of opportunities beyond the company's current backlog to support future growth.

Investor takeaway

Add it all up and Kinder Morgan is well qualified to be considered a blue chip stock. In fact, because it's better insulated against falling oil and gas prices it offers investors an even safer option than fellow energy blue chip stocks ExxonMobil and Chevron. So, investors looking for a blue chip energy stock need to look no farther than Kinder Morgan.

Top dividend stocks for the next decade

The smartest investors know that dividend stocks like Kinder Morgan simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here.

Stocks Gain as Fed Leaves ‘Considerable Time’ Intact

Stocks rose, fell, and are rising again after the Federal Reserve left “considerable time” in its statement.

Agence France-Presse/Getty Images

The S&P 500 has gained 0.3% to 2,004.23, while the Dow Jones Industrial Average has advanced 0.3% to 17,174.93. The Nasdaq Composite has advanced 0.4% to 4,570.25.

CRT Capital’s David Ader tries to decide whether the Fed release leans dovish or hawkish:

Fed keeps language re considerable time intact, which could have been dovish, but with dots moving up (in part due a change  in increments) the market apparently reads this as hawkish.  That’s overblown in our view and given the subdued inflation language, labor slack, and moderate expansion expect that when they due remove they’ll attach data dependent and something a bit dovish to soothe.

The Lindsey Group’s Peter Boockvar says the stock market, which is rising, and the bond market, which is falling, are looking at two different things:

The FOMC still believes that there is a "significant underutilization of labor resources" after acknowledging that "labor market conditions improved somewhat further" and also said that "it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after" QE ends…

In the June forecasts where each member predicted where the fed funds rate would be by year end 2015, it was 1.13% on average. The new forecast has an average of 1.375% and this compares with the December 2015 fed funds futures contract which was trading at .74% prior to the release of today's statement…

Bottom line, we can easily argue that the statement was dovish as the two key wordings were left in but the Dot forecasts are more hawkish and that is what the bond market is responding to. The stock market is focused on the statement, the bond market and its selloff is focused on the dots.

The folks at Societe Generale think the fact that the Fed laid out an exit strategy is hawkish:

The FOMC also published the official set of exit principles. There were no surprises here in terms of the sequence and the tools, but the mere fact that they put this out today rather than December adds to the overall hawkish tone of today’s meeting.

Here’s a chart of the S&P 500′s move today:

That S&P 500–always the optimist.

3 Stocks Spiking on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.

Read More: Triple Your Gains With These 5 Cash-Rich Companies

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.

Read More: 5 Stocks Set to Soar on Bullish Earnings

With that in mind, let's take a look at several stocks rising on unusual volume recently.

Astronics

Astronics (ATRO), through its subsidiaries, designs and manufactures products for the aerospace and defense industries worldwide. This stock closed up 3% to $63.87 in Wednesday's trading session.

Wednesday's Volume: 289,000

Three-Month Average Volume: 145,175

Volume % Change: 87%

From a technical perspective, ATRO ripped higher here right off some near-term support at $62 with above-average volume. This move to the upside on Wednesday briefly pushed shares of ATRO into breakout territory, since the stock flirted with some key overhead resistance levels at $64.24 to $64.45. Shares of ATRO tagged an intraday high of $64.58, before closing just below that level at $63.87. Market players should now look for a continuation move to the upside in the short-term if ATRO manages to take out Wednesday's intraday high of $64.58 with high volume.

Traders should now look for long-biased trades in ATRO as long as it's trending above Wednesday's intraday low of $62.01 or above more near-term support at $60 and then once it sustains a move or close above $64.58 with volume that hits near or above 145,175 shares. If that move kicks off soon, then ATRO will set up to re-test or possibly take out its next major overhead resistance levels at $70 to $70.40, or even its 52-week high at $72.99.

Read More: 5 Stocks With Big Insider Trading

Insmed

Insmed (INSM), is a biopharmaceutical company, focuses on developing and commercializing inhaled therapies for patients with serious lung diseases. This stock closed up 10.8% to $13.09 in Wednesday's trading session.

Wednesday's Volume: 3.68 million

Three-Month Average Volume: 978,108

Volume % Change: 230%

From a technical perspective, INSM soared sharply higher here with strong upside volume flows. This stock recently gapped down big from just over $17 to under $13 with heavy downside volume. Following that gap, shares of INSM continued to trend lower with the stock hitting its recent low of $11.25. Shares of INSM have now started to rebound strong off that $11.25 low and it's quickly moving within range of triggering a big breakout trade. That trade will hit if INSM manages to take out Wednesday's intraday high of $13.15 to its gap-down-day high of $13.52 with high volume.

Traders should now look for long-biased trades in INSM as long as it's trending above Wednesday's intraday low of $12.01 and then once it sustains a move or close above those breakout levels volume that hits near or above 978,108 shares. If that breakout hits soon, then INSM will set up to re-fill some of its previous gap-down-day zone that started just over $17.

Read More: Do You Own These 5 Toxic Stocks? Watch Out!

AerCap

AerCap (AER), through its subsidiaries, is engaged in leasing, financing, selling and managing commercial aircraft and engines primarily in the U.S. and Russia This stock closed up 3.7% at $47.64 in Wednesday's trading session.

Wednesday's Volume: 3.59 million

Three-Month Average Volume: 671,388

Volume % Change: 356%

From a technical perspective, AER jumped higher here and broke out above some near-term overhead resistance levels at $46 to $46.82 with high volume. This spike to the upside on Wednesday is starting to push shares of AER within range of triggering a major breakout trade. That trade will hit if AER manages to take out Wednesday's intraday high of $47.95 to its 52-week high at $48.81 with high volume.

Traders should now look for long-biased trades in AER as long as it's trending above Wednesday's intraday low of $46.11 or above its 50-day at $45.32 and then once it sustains a move or close above those breakout levels with volume that hits near or above 671,388 shares. If that breakout kicks off soon, then AER will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60.

To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>3 Stocks Under $10 to Trade for Breakouts

>>Trade These 5 Consumer Stocks for Gains in August

>>5 Large-Cap Stocks to Trade for Gains

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.