Codemasters set to ride the gaming revolution
Updated
When assessing the viability of an investment it helps to understand what the story or catalyst is for your investment rationale. I have been looking at the opportunities that gaming is bringing to the table to smaller companies, because developers are the future picks and shovels of this industry. With more competition among the big platform providers and e-gaming growth the solid developers that have proven they can scale will benefit. Codemasters is in prime position along with some other notable UK names, i.e. Frontier and Team 17. Codemasters is my favorite pick of the mix due to their focus on racing, which I think is a genre that will grow in popularity as part of the e-gaming boom.
The price has required some consolidation since coming onto the market in mid 2018, we have recently seen lower average volumes and the price staying above its 50 day MA, if it can break above the current however the RSI is above my comfort zone so this indicates some caution is needed. I expect trend traders would want to see a breakout and a retest before taking a long position here. The price is acting like there are not many sellers out there, I'm suggesting the strong possibility of a breakout of the right angled triangle. The fundamentals which I give over 50% weighting to look good. Strong investor/partners like Big Reliance and Swedbank, strong sales growth, cash>debt. As hybrid investor/trader I will be scaling in for the investment thesis and increasing my position if the trend line is broken to the upside. A incremental stop will be needed on this type of trade, 10% below each buy price is a likely comfort level.
Watch out for the big new title GRID which comes out on the 8th October, this will be included in the list of titles available on Google Stadia among the other major platforms. If sales meet expectations then this will further drive growth, the board also expects to see an increase in bottom line growth with the already released titles including Dirt Rally doing well.
This is my first article, please let me know your feedback.
The price has required some consolidation since coming onto the market in mid 2018, we have recently seen lower average volumes and the price staying above its 50 day MA, if it can break above the current however the RSI is above my comfort zone so this indicates some caution is needed. I expect trend traders would want to see a breakout and a retest before taking a long position here. The price is acting like there are not many sellers out there, I'm suggesting the strong possibility of a breakout of the right angled triangle. The fundamentals which I give over 50% weighting to look good. Strong investor/partners like Big Reliance and Swedbank, strong sales growth, cash>debt. As hybrid investor/trader I will be scaling in for the investment thesis and increasing my position if the trend line is broken to the upside. A incremental stop will be needed on this type of trade, 10% below each buy price is a likely comfort level.
Watch out for the big new title GRID which comes out on the 8th October, this will be included in the list of titles available on Google Stadia among the other major platforms. If sales meet expectations then this will further drive growth, the board also expects to see an increase in bottom line growth with the already released titles including Dirt Rally doing well.
This is my first article, please let me know your feedback.
Note
Looking at my original thesis I can see that a nice base was forming and got a good trend upwards from the base. I'll be looking for a pullback on low volume to hopefully form a handle, this will prompt me to add to my position off a new higher base. CDM is still undervalued compared to iots peers and has had some recent success with its latest release.
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