Below we present the list of Top 5 Video Gaming Stocks to Buy Now. For our methodology and a more comprehensive list please see Top 10 Video Gaming Stocks to Buy Now.
- Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Some of video gaming’s biggest names enter the fray on the back-half of our list of top video gaming stocks to buy now, beginning with Grand Theft Auto developer Take-Two Interactive Software, Inc. (NASDAQ:TTWO), which was owned by 52 hedge funds on September 30. TTWO continues to trail rivals EA and ATVI in hedge fund ownership after several funds unloaded positions in Q3.
Take-Two has an attractive stable of core game series that includes Grand Theft Auto, Red Dead Redemption, and NBA 2K that provide a strong buffer while it pushes deeper into mobile gaming and esports and builds out a larger stable of offerings through initiatives like its recent $994 million acquisition of Codemasters. NBA 2K bookings grew by 23% year-over-year in Q3 (TTWO’s fiscal Q2) after the release of 2K21 in September.
- Electronic Arts Inc. (NASDAQ:EA)
Electronic Arts Inc. (NASDAQ:EA) is the fourth-ranked video game stock, being owned by 62 hedge funds, down from a peak of 79 in 2018. EA’s cash flow continues to surge, topping $2 billion for the trailing 12-month period ended September 30, which prompted the company to recently initiate a dividend for the first time and to launch a share buyback program.
Wedgewood Partners discussed EA in its Q3 investor letter, noting that while the pandemic tailwinds in the form of boosted engagement for key titles like Madden and Apex Legends may not last, the game publisher has numerous other growth drivers on tap, including the new console cycle and its Project Atlas game development platform. EA was the fund’s 11th-largest 13F holding on September 30.
- NVIDIA Corporation (NASDAQ:NVDA)
GPU maker NVIDIA Corporation (NASDAQ:NVDA), which is on pace to shatter its sales and earnings records this year, lands in third spot. 82 hedge funds were long NVDA on September 30, down from 92 at the end of June. Rajiv Jain’s GQG Partners owned a $2.54 billion position in NVDA at the end of Q3.
After a lackluster 2019, Nvidia is again exhibiting impressive revenue growth, which reached 57% year-over-year in Q3 of the company’s fiscal 2021. Strong guidance for Q4 suggests more of the same to close out the year. Gaming accounted for 48% of sales during the September quarter, a figure which has been eaten into by the company’s growing data center platform, which received a big boost following the April closing of Nvidia’s $6.9 billion purchase of Mellanox.
- Activision Blizzard Inc. (NASDAQ:ATVI)
Activision Blizzard Inc. (NASDAQ:ATVI), which has frequently battled it out with EA over the years for top billing among hedge funds, tops its rival in Q3 but falls to an unexpected challenger for top spot. Shares of the World of Warcraft and Call of Duty publisher were owned by 93 hedge funds at the end of Q3, down from just over 100 at the end of Q1.
Despite being a veritable geriatric in a gaming world that moves at lightspeed, World of Warcraft remains immensely popular and a huge cash cow for Activision Blizzard. Preorders for the latest expansion, Shadowlands, hit an all-time high for the series, while last year’s release of World of Warcraft Classic lead to a massive surge in subscribers.
Activision Blizzard grew bookings by 46% year-over-year in Q3 and has big things on the horizon that should contribute to continued growth in the years to come, including Diablo 4 and Overwatch 2.
- Sea Ltd (NYSE:SE)
The top video gaming stock to buy now is Sea Ltd (NYSE:SE), which has been an 11-bagger since its IPO in 2017, including 350% gains this year. Hedge fund ownership of SE rose by 400% last year and has continued to climb ever higher in 2020, with 95 hedge funds being long SE on September 30.
Sea Ltd started off as a simple communication platform for gamers in the Southeast Asian market before the company successfully expanded into game publishing and eventually developing. It hasn’t stopped there however, building e-commerce and fintech platforms into its service to create what Tao Value called a “super app for ASEAN region” that has taken a leading market position in all three segments.
On an adjusted basis, Sea Ltd would have pulled in $1.66 billion in sales in Q3, doubling its sales for the entire 2018 year in a single quarter. Monthly active users hit 572.4 million at the end of Q3, a 78% year-over-year increase, while digital entertainment bookings are expected to rise by a similar amount in 2020 to reach $3.1 billion.
If you’re looking for some ironclad investment ideas that have stood the test of time, don’t miss the 15 Best Blue Chip Stocks to Buy Now.
Disclosure: None.
