thetechnicaltrader.net

MCZ – Mad for Mad Cats

May 22, 2007 Small Cap Stock Picks

MAD CATZ INTERACTIVE INC COM Company Overview

http://www.thetechnicaltrader.net

Mad Catz Interactive, Inc. (Mad Catz) designs, manufactures, markets and distributes accessories for all video game platforms, including the Microsoft Xbox and Xbox 360; Nintendo GameCube, Game Boy Advance, Game Boy Advance SP, DS, N64 and Micro, and Sony PlayStation, PlayStation 2 and PSP. The Company also designs, manufactures, markets and distributes accessories for the Apple iPod. Mad Catz’s products include video game accessories of all types, such as control pads, steering wheels, joysticks, memory cards, video cables, light guns, dance pads, microphones, car adapters and carry cases. The Company also markets game enhancement software, distributes video game software and publishes video game titles. During the fiscal year ended March 31, 2006, approximately 72% of its gross sales were generated in the United States, 9% in Canada, 19% in Europe, and less than 1% in other countries, including Australia, Japan, Korea, New Zealand and Singapore.

I’ll tell you whats gonna happen here. Price is gonna retrace tomorrow near the midpoint and im going to buy some shares, maybe you will too? Then price will continue to rally in an unknown amount of time and we’re gonna pull out 25-30% + on this trade. Right? lol who knows, thats my best guess

MCZ has been doing a great job in cleaning up there act after having a very rough fiscal year in 2006 posting a large loss compared with there other years in business. Which resulted in price action dropping to a low of just 30 cents in early 2006. Price has since been in a strong uptrend ever since breaking out to a new 52wk high today of 1.28.

MCZ got rid of most of there low margin product inventories and are now focusing on there high margin gaming accessories. Being that all the new gaming systems have been released not too long ago MCZ revenues have been growing significantly increasing there margins and putting them back into profitability. MCZ’s price to sales ratio is very low at just .55 and soon i believe will have a positive P/E ratio once Q4 is announced.

Another speculative thing that was recently announced from MCZ is there licensing deal with MSFT for HALO 3 products. HALO is the most popular game series for any console out there. I myself “used” to play it for hours and hours with my friends. I’m sure me and my buddies will be putting in a few solid hours H3 when it comes out. I remember when Halo 2 was released here in on campus a few years ago, they opened the doors to game crazy at midnight for sale of Halo 2. Me and my buddy showed up around 1am to go get a copy, lol…………….. there was like 500 people there! haha it was insane. Anyways we waited in line for 2 hours and still was only around 1/2 way to getting to even buy a copy so we bailed out. Anywho, my point being is that this is the game of all console games and im sure these accessories will be a huge hit for all those nerds are out there that are willing to buy halo accessories to pimp out there xbox 360 gear. And yes there are a lot of those gamers out there. The gaming industry has since grown larger than the music industry to my surprise. To get an idea of how popular Halo 2 was, 2.4 million copies were sold in the first 24 hours earning $125m thus out-grossing the highest grossing release in entertainment history of all time, which was Pirates of the Caribbean. So be that as it may, Halo 2 was the biggest event in the entertainment industry ever Halo 2 was the most popular game played on XBOX live with over 1/2 billion games played until in 2006(2 years after h2 release) . Gears of War took over the top spot, which might i add MCZ has licensing deals with also for accessories.

additional license deals:
Business Wire (Tue, Mar 6)
Mad Catz Unveils New Line of Wireless and Wired GamePads(TM) for Playstation(R) 3

Mad Catz to Offer New Licensed Accessories to Accompany Launch of BioWare’s(R) Mass Effect(TM)
Business Wire (Wed, Mar 21)

Mad Catz Renews NBA License to Produce New Line of Controllers and Related Accessories
Business Wire (Tue, Apr 10)

Mad Catz Expands NFL Controller and Related Accessories License to Include New Regions
Business Wire (Wed, May 16)

In addition to the new licensing deals, Halo 3 deal, and improving fundamentals. MCZ’s chart looks extremely bullish breaking out of $1/share which was a prior resistance mark. This is the kind of set up that momentum could price price to $2/share in a short amount of time. Similar to my other plays like PUDC, RPTN, PCSV, and ABAT. Price broke out from its prior peak of $1 as well as breaking out of the ascending wedge pattern on heavy volume giving MCZ a lot of momentum in this trend. My plan is to nab some shares hopefully near the midpoint of todays candle. lets see how it goes

-fous