In this article, we discuss 10 best gaming stocks to buy now. If you want to skip our detailed analysis of the gaming industry and see the top gaming stocks, go directly to 5 Best Gaming Stocks To Buy Now.
In 2021, the gaming market was valued at $198.40 billion, and this number is expected to grow to $339.95 billion by 2027. This represents a CAGR of 8.94%, with 2021 as the base period. Gaming platforms registered abundant traffic amid the pandemic-driven lockdowns, resulting in a dramatic increase in players, revenue, and profitability.
Perhaps the most important growth driver in this market is mobile gaming, as 61% of the Q1 2022 revenue was generated from mobile gaming, as per reports from Data.ai and International Data Corp, dated May 25. The mobile gaming segment is forecasted to expand 1.7 times quicker than the rest and exceed $136 billion in revenue during 2022.
The integration of social media and gaming platforms, as well as in-game monetization, could further develop the gaming market. The metaverse has decidedly given the gaming market a significant boost as well. In addition to that, Morgan Stanley analyst Brian Nowak believes that despite the pandemic normalizing and people preferring the real world over virtual realities for entertainment, a lot of secular gaming trends are likely to prevail. To benefit from the growing gaming industry, some of the most notable stocks to watch include Sony Group Corporation (NYSE:SONY), The Walt Disney Company (NYSE:DIS), and Alphabet Inc. (NASDAQ:GOOG).
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Our Methodology
We selected companies that are operating in the gaming sector and have recently received positive analyst ratings for this list. The hedge fund sentiment was gauged from Insider Monkey’s Q1 2022 database of 900+ elite funds. Since hedge funds carefully build their portfolios over time and constantly assess market dynamics, Insider Monkey believes that replicating their stock picks is a wise strategy.
Best Gaming Stocks To Buy Now
10. Super League Gaming, Inc. (NASDAQ:SLGG)
Number of Hedge Fund Holders: 5
Super League Gaming, Inc. (NASDAQ:SLGG) was incorporated in 2014 and is headquartered in Santa Monica, California. The company develops and operates games, monetization tools, and content across metaverse gaming platforms. These tools and content channels help developers create better games and entertain players.
On May 17, H.C. Wainwright analyst Scott Buck told investors that macro unpredictability has led to an attractive entry point in the shares of Super League Gaming, Inc. (NASDAQ:SLGG). The analyst observed that advertising and content monetization resulted in significant revenue growth in Q1. He reiterated a Buy recommendation on the stock with a $4 price target.
Among the hedge funds tracked by Insider Monkey, Super League Gaming, Inc. (NASDAQ:SLGG) was part of 5 public stock portfolios at the conclusion of the first quarter of 2022, with collective stakes worth $1.5 million. Paul Marshall and Ian Wace’s Marshall Wace LLP is the biggest position holder in the company, with 428,387 shares worth $804,000.
In addition to Sony Group Corporation (NYSE:SONY), The Walt Disney Company (NYSE:DIS), and Alphabet Inc. (NASDAQ:GOOG), Super League Gaming, Inc. (NASDAQ:SLGG) is on the radar of elite investors who want exposure to the gaming sector.
9. Avid Technology, Inc. (NASDAQ:AVID)
Number of Hedge Fund Holders: 22
Avid Technology, Inc. (NASDAQ:AVID) operates in the electronic gaming and multimedia industries. The company offers software and integrated solutions for video and audio content creation, which assists the development of video games and gaming platforms. The stock rose about 9% in early May after its director, Asmar Christian, bought 250,000 common shares for $6.2 million. The shares were priced approximately at $24.73 each.
Northland analyst Nehal Chokshi on May 25 raised the price target on Avid Technology, Inc. (NASDAQ:AVID) to $53 from $48 and reiterated an Outperform rating on the shares. According to the analyst, the extensive detail on company drivers and the components of subscription guidance provided by Avid Technology, Inc. (NASDAQ:AVID) gave him confidence to lift his calendar EPS estimates for 2023 through 2025 by 7% to 9%.
Insider Monkey’s Q1 2022 database suggests that 22 hedge funds were bullish on Avid Technology, Inc. (NASDAQ:AVID), with collective stakes worth about $521 million, compared to the same number of funds in the earlier quarter, holding stakes in the company valued at $486 million. Lauren Taylor Wolfe’s Impactive Capital is the biggest position holder in the company, with a stake worth roughly $240 million.
8. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 26
Sony Group Corporation (NYSE:SONY) is a Japanese multinational conglomerate that provides network services related to game, video, and music content, in addition to electronic equipment and consumer tech devices. Sony Group Corporation (NYSE:SONY) is one of the leading contenders in the interactive gaming space, with its PlayStation having millions of monthly active users. The company is looking to expand further in the gaming segment by distributing gaming equipment for personal computers.
Oppenheimer analyst Martin Yang on May 18 maintained an Outperform rating on Sony Group Corporation (NYSE:SONY) but lowered the price target on the stock to $125 from $150. Sony Group Corporation (NYSE:SONY), in line with expectations, continued focusing on content IP, direct-to-consumer services, and sensing technologies, the analyst observed. He also added that Sony Group Corporation (NYSE:SONY) identified metaverse and mobility as two new growth segments.
Among the hedge funds tracked by Insider Monkey, Sony Group Corporation (NYSE:SONY) was part of 26 public stock portfolios in Q1, with collective stakes exceeding $1 billion. Alkeon Capital Management is the leading shareholder of the company, with 5.70 million shares worth $597.80 million.
Here is what Aristotle Capital Management International Equity ADR has to say about Sony Group Corporation (NYSE:SONY) in its Q1 2022 investor letter:
“Sony, maker of the PlayStation video game console, was a leading detractor for the quarter. After a strong year in 2021, a shortfall in PlayStation 5 sales due to continued semiconductor shortages has dampened new console unit sales. Although there are likely to be continued limitations on the supply of components in the short term, consumer demand remains strong, and upcoming releases of major titles such as Horizon Forbidden West and Gran Turismo 7 are likely to further enhance demand. While Sony continues to manage supply-chain headwinds, the company has also again demonstrated its ability to build on the fundamental strength of its business across various segments. During the quarter, Sony acquired Bungie, a U.S.-based video game developer known for the Destiny franchise and live game services; completed its initial equity investment in Japan Advanced Semiconductor Manufacturing, a foundry service subsidiary of Taiwan Semiconductor Manufacturing Company (TSMC); and acquired Brazilian music label Som Livre. Lastly, Sony announced a partnership with Honda Motor (NYSE:HMC) where the two companies expect to combine Honda’s expertise in manufacturing vehicles with Sony’s proficiency in imaging, sensing, telecommunication and network technologies to develop and commercialize electric vehicles. We feel these strategic actions demonstrate Sony’s ability to continue to improve on its market positions across its business segments with a long-term, forward-looking approach.”
7. SciPlay Corporation (NASDAQ:SCPL)
Number of Hedge Fund Holders: 26
SciPlay Corporation (NASDAQ:SCPL) is a subsidiary of Scientific Games Corporation. The company develops social casino games and casual games such as bingo, solitaire, and backgammon. The stock has gained close to 6% year to date as of June 30.
Wedbush analyst Michael Pachter upgraded SciPlay Corporation (NASDAQ:SCPL) on June 10 to Outperform from Neutral, raising the price target to $17 from $14.50. The analyst believes multiple growth drivers could eventually allow SciPlay Corporation (NASDAQ:SCPL) to exceed expectations for the next few years, including “Alictus and the ad business, a pipeline of new casual releases, the gradual rollout of Project All Star and the evolution of the SciPlay engine, and the emergence of the direct-to-consumer platform”. The analyst sees further upside in the shares if company management can carry out its vision.
According to Insider Monkey’s Q1 data, 26 hedge funds were bullish on SciPlay Corporation (NASDAQ:SCPL), with combined stakes worth $124 million, compared to 25 funds in the prior quarter, holding stakes in the company valued at approximately $121 million. Arnaud Ajdler’s Engine Capital is the biggest stakeholder of SciPlay Corporation (NASDAQ:SCPL), with roughly 2 million shares worth $25.6 million.
6. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 27
DraftKings Inc. (NASDAQ:DKNG) is a Boston-based digital sports entertainment and gaming company. The company offers sports betting and gaming technologies. On June 28, JMP Securities analyst Jordan Bender initiated coverage of DraftKings Inc. (NASDAQ:DKNG) with an Outperform rating and a $25 price target. The analyst believes the stock will see an optimistic re-rating as the company moves towards profitability. According to the analyst, DraftKings Inc. (NASDAQ:DKNG) is a high-growth and properly integrated gaming technology company that is ranked among the top three companies of its kind in the United States. He sees DraftKings Inc. (NASDAQ:DKNG) growing revenue at a yearly rate of 19% through 2030.
According to Insider Monkey’s first quarter database, 27 hedge funds reported long positions in DraftKings Inc. (NASDAQ:DKNG), compared to 34 funds in the last quarter. Like Sony Group Corporation (NYSE:SONY), The Walt Disney Company (NYSE:DIS), and Alphabet Inc. (NASDAQ:GOOG), elite hedge funds are monitoring DraftKings Inc. (NASDAQ:DKNG) as a notable gaming play.
Here is what Baron Small Cap Fund has to say about DraftKings Inc. (NASDAQ:DKNG) in its Q4 2021 investor letter:
“Shares of DraftKings, Inc. fell in the quarter, as stocks of online gaming companies were under pressure. Sports betting and i-gaming are rolling out with great fanfare and success across the country; however, investors seem concerned about competition and margins. Most participants are spending heavily on marketing and promotions, which is cutting into margins. We see this as a worthy investment in customer acquisition at a moment in time when revenues are just building. We continue to believe that online sports betting and gaming will be enormous industries, and that DraftKings will be a leading player. We think the business will have high margins as it matures. We believe we are underwriting the business conservatively and see much upside in the long term.”
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Disclosure: None. 10 Best Gaming Stocks To Buy Now is originally published on Insider Monkey.
