“Motley Fool’s #1 Stock… overdue for more dramatic growth?”

By Travis Johnson, Stock Gumshoe, December 15, 2009

The Foolies are really ramping up their advertising again, it seems — I haven’t had this many questions about a teaser in quite a while. The ad now is for their flagship Stock Advisor newsletter, and it teases “The Motley Fool’s #1 Stock”. Here’s how they get us started:

“While America is captivated by the Twilight craze — the holiday blockbuster that’s breaking box office records — another craze has quietly blown these records out of the water! Handing The Motley Fool’s #1 company $555 million in just 5 days!

“Though you won’t hear about it on the Today show, members of our community of individual investors know this company’s name well — because it’s made them very wealthy! Discover this incredible opportunity and why it’s overdue for even more dramatic growth…”

Hotter than Twilight? Color me intrigued! As usual, they provide lots and lots and lots of blather to back up their teaser pick (without, of course, naming the stock — but don’t worry, after I make you sit through my blather for a moment I’ll be happy to reveal the company’s name and ticker, no charge!)

Here’s the preamble:

“To do this amazing story justice, I must start at the beginning…

“Back in the summer of 1979, four men made a startling discovery that would forever change their lives…

“One day while eating lunch, they read over an internal memo that revealed their company’s top selling products of the year.

“After some quick math, they figured out that the products they created were responsible for about 60% of the company’s total revenue — just four guys generated 60 million dollars!

“These four gentlemen now had concrete evidence of their value to the company. So they went to the CEO seeking a fair share of the profits or at the very least, a raise.

“But, amazingly, the CEO was not impressed — not even a little bit.

“He called them a bunch of “prima donnas.” And said they were no more important to his company than the people on the assembly line who put the product in the box.

“He refused to give them a penny more than their $20,000 salaries.

“It was then that these four men – who would become known to industry insiders as the ‘Gang of Four’ — did something most of us only dream of doing…

“They quit their jobs and went into business for themselves – as a direct competitor to their previous employer!”

The American dream, right? Take your ideas, make your millions, throw your success in your former employer’s face … good stuff. And more or less true in this case (I don’t know the specifics — like, whether or not the CEO actually called them “prima donnas”).

And we go on to get into some specifics, and some additional temptation to get you to subscribe to their newsletter and buy this stock:

“I’m talking about investing in an innovative company that will go on to dominate this new industry and continue to grow for years and years.

“I’m talking about the chance to earn enough money to pay off your mortgage or send your kids to any college they want!

“And The Motley Fool’s #1 Stock is this opportunity. In fact, The Motley Fool is actively recommending our members pick up more shares right now — and you can join us for the ride!

“Because it’s the very best stock in a sector that has tremendous growth potential in the months and years ahead. As the CEO of this industry’s trade association says, this is…

“An ‘unprecedented opportunity — one that must be grasped.’

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“Listen, I wouldn’t waste your time with a company that didn’t have a lot of room to run. Or without specific catalysts to get it moving. Well, this company’s potential is threefold…

“It’s cheap: Barron’s calls it “inexpensive” despite record sales and the company buying back nearly $300 million in stock last quarter. It’s trading for less than 15 times 2010 earnings — amazing for a company that’s projected to grow its earnings 18% a year over the next 5 years!

“It has blockbuster potential: The $555 million sales record I mentioned earlier was just the beginning. This company has three more product launches coming down the pike. Our analysts estimate these launches will move 35 million units — handing this company over $2 billion in sales in the next 12 months!

“It’s acquisition hungry: According to Bloomberg, this company’s management is on the hunt for acquisitions. It has billions in cash reserves and $0 in debt — making it easy for this company to gobble up a competitor or rising start-up.

“Plus, not to mention, this company is the dominant player in an industry that’s projected to double in size by 2012. Making this the perfect investment for right now. All you have to do is hold on to it and watch it compound your wealth year after year — handing you an incredible return!”

So which company are they teasing? Well, just to be sure I tossed all that exciting info into the Gumshoe’s mighty Thinkolator … but as I suspected, this is indeed a stock that I’ve been following for a while:

Activision Blizzard (ATVI, click here for a free trend analysis on ATVI by MarketClub — they don’t think the technicals look so compelling right now)

Frankly, like the Fools I’m also surprised that the stock is still this cheap. This was a stock I profiled for the Irregulars as my “Idea of the Month” just over a year ago — and it’s essentially priced the same now as it was then, which means it’s trailing the S&P 500 pretty significantly.

The four “prima donnas,” who were the guys developing games for Atari’s revolutionary 2600 and their other machines (Atari was then owned by what is now Time Warner), were David Crane, Larry Kaplan, Alan Miller and Bob Whitehead, and they left to form Activision in the late 1970s, becoming the first third-party developers for console video games — a reaction, in part, to the corporate dominance that had Atari making all the games for its own consoles, and not crediting the game developers at all, either intellectually or financially, for the huge success of hit titles. (You can read up on Activision history at Gamasutra here if you’re curious about the