In this article, we will be looking at the 11 best gaming stocks to buy now. To skip our detailed analysis of the video game industry, you can go directly to see the 5 Best Gaming Stocks to Buy Now.
If you’re tired of reading about how the coronavirus pandemic has adversely affected various industries and sectors across the globe, then you might have just stumbled across the perfect article. While almost every industry in the world has been suffering losses because of the pandemic, the video game industry can be considered one of the winners who have benefited from stay-at-home and lockdown restrictions imposed globally. As more people had to comply with social distancing, more people also began getting the time to play the games they couldn’t before, due to which the global gaming market was able to reach $162.32 billion last year. Game downloads across the world also went up 75% from 2019 to 2020, while watch time for live streams went up by 45% in the same time frame.
The pandemic ended up helping the gaming industry grow even larger than it had been previously. As older players who had not been able to find the time to play games before lockdown impositions came back, joined by newer gamers and even heavy gaming addicts, the gaming industry was able to see unprecedented growth. Electronic Arts Inc. (NASDAQ: EA) reported their strongest quarterly sales in the company’s 38-year history last June, as more people were forced to stay home and keep themselves entertained. The company also saw an eye-popping 87% increase in net bookings during the quarter, shocking everyone including company executives who claimed the June quarter was normally one of their “quietest.”
Owing to the increased popularity among not only children but adults as well, it is unsurprising that the gaming industry is going through such a boom. Bloomberg also reported this year that the video and mobile gaming industry may be one of the most lucrative industries on Wall Street. They noted that nowadays, many first-generation gamers are all grown up and exercise a sizeable spending power when it comes to video games, and so gaming can no longer be considered mere child’s play. Bloomberg has also cited a Mordor report which stated that global gaming market may exceed $256 billion by 2025, growing at a CAGR of 9.17% between 2020 to 2025. Additionally, the fact that gamers in the US stated that they had spent 45% more time on video games during quarantine and lockdown makes the above much more believable.
In light of the above, companies like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTC: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN) are profiting more off of the lucrative gaming market. Even Amazon.com, Inc. (NASDAQ: AMZN), despite actually being a tech retail giant, has been able to reap the benefits of the COVID-19-influenced gaming industry boom with its Prime Gaming segment.
Because of the pandemic, the entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 28th, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Without further ado, let’s look at the 11 best gaming stocks to buy now. The stocks added to our list were selected on the basis of hedge fund sentiment, analysts’ ratings, fundamentals, and growth potential based on core business strengths.
Best Gaming Stocks to Buy Now
11. The9 Limited (NASDAQ: NCTY)
Number of Hedge Fund Holders: 5
The9 Limited (NASDAQ: NCTY) is a Chinese internet company with a focus on developing cryptocurrencies mining business and proprietary or licensed online games. The company mainly deals with mobile and TV games and is ranked 11th on our list of the best gaming stocks to buy now.
This March, The9 Limited (NASDAQ: NCTY) signed a $2 million Filecoin mining machine purchase agreement which is expected to increase the company’s storage mining power. The company has also signed other MOUs, purchase deals, and acquisition agreements to gain more bitcoin mining machines, a $5.7 million Chia cryptocurrency mining machine, and a Canadian clean energy cryptocurrency mining company called Montcrypto as well, through April to June.
The stock has been on the rise in light of these deals and was leading consumer gainers on June 4th. The9 Limited (NASDAQ: NCTY) released its FY results, reporting a revenue of $0.09 million, and an EPS of $0.37 this March. The stock has gained 331.36% in the past 6 months and 130.66% year to date.
By the end of the first quarter of 2021, 5 hedge funds held stakes in The9 Limited (NASDAQ: NCTY) worth roughly $8.85 million. This is compared to 1 hedge fund holder in the previous quarter with a total stake value of approximately $133,000. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
10. HUYA Inc. (NYSE: HUYA)
Number of Hedge Fund Holders: 13
HUYA Inc. (NYSE: HUYA) is an electronic gaming company operating game live streaming platforms in China. The company’s platforms allow broadcasters and viewers alike to interact with each other during the live stream, which also broadcasts other entertainment content like talent shows and anime. The company ranks 10th on our list of the best gaming stocks to buy now.
HUYA Inc. (NYSE: HUYA) has agreed to acquire DouYu International Holdings Limited (NASDAQ: DOYU), and the deal is set to close this year. In the first quarter of 2021, HUYA Inc. (NYSE: HUYA) had an EPS of $0.17, beating estimates by $0.04. Its revenue of $405.38 million was up 19.15% year over year and beat estimates by $6.81 million. HUYA Inc. (NYSE: HUYA) has a gross profit margin of 20.77%.
By the end of the first quarter of 2021, 13 hedge funds held stakes in HUYA Inc. (NYSE: HUYA) worth roughly $335 million. This is compared to 12 hedge funds in the previous quarter with a total stake value of approximately $341 million. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
9. Avid Technology, Inc. (NASDAQ: AVID)
Number of Hedge Fund Holders: 22
Avid Technology, Inc. (NASDAQ: AVID) is a developer of software and integrated solutions for video and audio content creation, management, and distribution across the globe. Avid Technology, Inc. (NASDAQ: AVID)’s products include the Media Composer, Avid NEXIS shared storage systems, and Maestro solutions for the integration of virtual sets and augmented reality, among others, which it provides to the gaming industry as well. Avid Technology, Inc. (NASDAQ: AVID) ranks 9th on our list of the best gaming stocks to buy now.
This May, Jefferies raised its price target on Avid Technology, Inc. (NASDAQ: AVID) to $33 after an investor day event which showed an improvement in the company’s fundamental profile. B. Riley holds a Buy rating on the stock with a Street-high price target of $35. In the first quarter of 2021, Avid Technology, Inc. (NASDAQ: AVID) had an EPS of $0.28, beating estimated by $0.07. The company also brought in $94.36 million in revenue, up 9.15% year over year and beating estimates by $3.78 million, and it has a gross profit margin of 64.22%. The stock has gained 148.71% in the past 6 months and 170.71% year to date.
By the end of the first quarter of 2021, 22 hedge funds held stakes in Avid Technology, Inc. (NASDAQ: AVID) worth roughly $319 million. This is compared to 26 hedge funds in the previous quarter with a total stake value of approximately $252 million. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
8. SciPlay Corporation (NASDAQ: SCPL)
Number of Hedge Fund Holders: 23
SciPlay Corporation (NASDAQ: SCPL) is a developer of social games for mobile and web platforms across the globe. The company’s games include social casino games like Jackpot Party Casino and casual games like MONOPOLY slots. It ranks 8th on our list of the best gaming stocks to buy now.
In the first quarter of 2021, SciPlay Corporation (NASDAQ: SCPL) had an EPS of $0.22, missing estimates by -$0.03. The company’s revenue was $151.1 million, a 27.73% increase year over year, and beating estimates by $5.87 million. The company has a gross profit margin of 68.37% and the stock has gained 25.5% in the past 6 months and 19.2% year to date.
By the end of the first quarter of 2021, 23 hedge funds held stakes in SciPlay Corporation (NASDAQ: SCPL) worth roughly $95.5 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $106 million. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
7. Take-Two Interactive Software, Inc. (NASDAQ: TTWO)
Number of Hedge Fund Holders: 41
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is a developer of interactive entertainment solutions worldwide. The company’s labels include Rockstar Games, 2K, Private Division, Social Point, and Playdots. It ranks 7th on our list of the best gaming stocks to buy now.
On June 24th, Take-Two Interactive Software, Inc. (NASDAQ: TTWO) traded higher after receiving a Buy rating at MoffettNathanson with a $214 price target indicated a 23% upside. Earlier this month, the stock was also upgraded to Buy at Jefferies, with a $231 price target, while the company also acquired Nordeus in a $378 million deal. Last month, the stock had been among software gainers because of its latest earnings report where it exceeded expectations. In its fiscal fourth-quarter 2021 report, Take-Two Interactive Software, Inc. (NASDAQ: TTWO) had an EPS of $ 1.43, beating estimates by $0.75. Its revenue of $784.53 million, up 7.56% year over year, beat estimates by $115.91 million. The company has a gross profit margin of 55.64% and Take-Two Interactive Software, Inc. (NASDAQ: TTWO) has gained 27.61% in the past year as well.
By the end of the first quarter of 2021, 41 hedge funds held stakes in Take-Two Interactive Software, Inc. (NASDAQ: TTWO) worth roughly $822 million. This is compared to 55 hedge fund holders in the previous quarter with a total stake value of approximately $1.51 billion. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is a good gaming stock to invest in.
6. Nintendo Co., Ltd. (OTCMTKS: NTDOY)
Number of Hedge Fund Holders: N/A
Nintendo Co., Ltd. (OTCMKTS: NTDOY) is a developer and manufacturer of electronic entertainment products in Japan, the US, Europe, and internationally. The company has several gaming platforms to offer, and it ranks 11th on our list of the best gaming stocks to buy now.
This May, Bloomberg reported that Nintendo Co., Ltd. (OTCMKTS: NTDOY) could be ready with their latest Switch console by September, while production would be starting in July. The new Switch may be more expensive than older models worth $299 and will be equipped with an upgraded NVIDIA Corporation (NASDAQ: NVDA) chip with next-generation tech.
Bloomberg reports have mentioned that the new Switch would support Deep Learning Super Sampling to offer higher fidelity graphics and efficiency. The system would support 4K graphics on a Switch plugged into a compatible TV. Universal Studios Japan has also opened up Super Nintendo World this year, despite initial delays because of the pandemic.
In its fiscal third-quarter 2021 report, Nintendo Co., Ltd. (OTCMKTS: NTDOY) had an EPS of $1.64, beating estimates by $0.27, while its $6.05 billion revenue, up 13.85% year over year, beat estimates by $459.52 million. The company has a gross profit margin of 55.17% and the stock has gained 30.77% in the past twelve months.
Anabatic Fund recently released its Q4 2020 investor letter, where they mentioned Nintendo Co., Ltd. (OTCMKTS: NTDOY). Here’s what they said:
“We established a new investment in Nintendo (NTDOY) during the second quarter of 2020, and it is now our third-largest investment. E-sports and video games are a hot sector right now, and the pandemic helped. “Nintendo Switch” was the #1 search on Amazon as the pandemic took hold – “Laptop” and “Airpods” came in 2nd and 3rd, respectively – but the Switch was a runaway hit before the pandemic and should be a mainstay for years to come.29
Our investment is based on a few simple ideas that have roots going back several decades. Nintendo may be trendy right now, but it’s an old company that has managed an impressive blend of long-term stewardship and continuous innovation. Nintendo’s portfolio long-lived characters and intellectual property should produce a growing stream of earnings and cash flow for many, many years. In this investment duration is clearly on our side.” (Click here to see the full text)
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Disclosure: None. 10 Best Gaming Stocks to Buy Now is originally published on Insider Monkey.
