Another gaming play that could soar in front of the potential Zynga IPO is Majesco Entertainment (COOL), a provider of video game products primarily for the family oriented, mass-market consumer. Majesco publishes games for numerous digital platforms, including mobile platforms such as the iPhone, iPad and iPod Touch, as well as online platforms. This stock is off to a huge start in 2011, with shares up over 280% -- as of the end of April, it was one of the 10 best-performing stocks under $5.
Majesco an extremely small company with a market cap of just $111 million and an enterprise value of $91 million. The stock trades at a trailing price-to-earnings of 51 and a forward price-to-earnings of 8. Majesco has around $7.89 million of cash on its balance sheet and only $84,000 in total debt. This company sells a number of games that are used on Facebook such as Bananagrams, Cooking Mama Friends' Cafe and Parking Wars 2. It also sells games used with smartphones such as KarmaStar and Gardening Mama.From a technical standpoint, Majesco looks ready to move back above its 50-day moving average of $3.21 a share. Volume on Thursday was incredibly strong, with over 3.4 million shares traded vs. the three-month average activity of 1.5 million. One could buy this stock with a close above the 50-day and look for a run back toward its 52-week high of $4.15 a share. If my thesis plays out here, I think Majesco will take that 52-week out and potentially double. The current short interest as a percentage of the float for Majesco is 6.9%. The bears have been increasing their bets from the last reporting period by around 5.7%, or by about 128,000 shares. We could easily get a solid short squeeze here with Majesco if the market decides to revalue all social gaming stocks much higher.
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