THQ develops, publishes and distributes interactive entertainment software for hardware platforms in the home video game market. The software titles are primarily based on properties licensed from 3rd parties. For the FY ended 12/31/00, net sales rose 14% to $347M. Net income fell 42% to $18.2M. Results reflect strong sales of new wrestling and kids titles, offset by increased royalty and project abandonment costs and the payment to a venture partner.

March 25, 2001

THQI is in the business of fun and games, which is apropos considering investors have been having a ball riding its stock to new yearly highs. THQ Incorporated provides interactive video games for the Sony PlayStation, Sega Dreamcast, Nintendo 64, Nintendo Game Boy and personal computers. The stock has been trending higher over the past 10 months after hitting a low of $7.63 on May 25th. On Friday, shares of THQI traded to a 52-week high of $34.88, representing a 357% gain from the low to the high. The stock price reflects an improved fundamental outlook for THQI based on the success of the new Sony PlayStation platform. We believe that THQI could move even higher as the new PlayStation gains acceptance and production of the consoles from Sony increases to meet demand. From a technical standpoint, THQI has support at Friday’s intra-day low of $32.88 with additional support at $ 33.21, the 5-dma. Resistance is Friday’s intra-day high of $34.88 and then the 12/7/99 intra-day low of $36.38. We are additionally encouraged by the fact that THQI’s MACD just turned positive and that the OBV is at a year high. A bounce off of $34.13 or a breakout above $34.88 on midday volume greater than 200,000 shares may be possible entry points. We plan to set stops at $31.50 to limit potential losses.

Picked on March 25th @ $34.50
Change since picked +0.00
Stop Loss @ $31.50

March 29, 2001

THQ did some consolidating work after trading to an all-time high of $39.94 during Tuesday’s session. A weak market and some profit taking sent shares of THQI to an intra-day low of $35.19 on Thursday. Fortunately, the stock bounced back to a close of $37.44 on volume of 496,000 shares. Momentum has cooled along with the daily volume, so THQI may need to consolidate before it moves to new highs. However, a volume surge in excess of 800,000 shares could easily push THQI into record territory. From a technical standpoint, support has fallen to the 5-dma at $36.85 with additional support at $35.19, Thursday’s intra-day low. Resistance is Wednesday’s intra-day high of $38.81 and then Tuesday’s intra-day high of $39.94. A bounce off of $36.85 or a breakout above $38.81 on midday volume of at least 250,000 shares may be possible entry points. Our stops remain at $35.

Picked on March 25th @ $34.50
Change since picked +2.94
Stop Loss @ $35.00

March 27, 2001

THQ broke out of its trading range after twelve sessions of sideways action. On Tuesday, the company announced that it was shipping the new “Blues Clues: Blues Big Musical” game for the Sony PlayStation and the new “Evil Dead: Hail to the King” game for the PC. Shares of THQI hit an all-time high of $39.94 following the news. However, the stock pulled back towards the end of the day to close at $38.88 on volume of 1.29 million shares. THQI is gaining ground and volume is soaring on the heels of a market recovery and improving fundamentals. The stock could see more all-time highs as we approach earnings season. In the meantime, support has moved up the 12/7/99 intra-day high of $38.06 with stronger support at $37, Tuesday’s intra-day low. Resistance is now Tuesday’s intra-day high of $39.94 and then possibly $41 or $42.50. Look to open new positions on a bounce off of $38.06 or a breakout above $39.94 on volume of at least 300,000 shares by noon. We have moved our stops up to $35 as downside protection.

Picked on March 25th @ $34.50
Change since picked +4.38
Stop Loss @ $35.00