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Videogame Sales to Grow on Coronavirus Crisis: 4 Winners

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The video gaming industry has found a blessing in disguise in the coronavirus pandemic that has been keeping people indoors most of the time. With not much option for entertainment except for streaming videos and music online, videogames has emerged as one of the biggest beneficiaries.

The last two months saw Americans spending record money on videogames, which has been helping the stocks in the space. And with the United States once again witnessing a spike in new coronavirus cases, videogame sales is likely to further get a boost.

Videogame Sales on the Rise

Videogame makers didn’t have to work hard to drive sales this year. The coronavirus pandemic gave an organic push to sales, with Americans shelling out millions of dollars on videogames, as the pandemic kept them at home. In fact, the video gaming industry was one of the least affected due to the pandemic as most employees worked online and companies continued updating their games and introducing new ones.

In fact, the video gaming industry was doing well even before the pandemic broke out. After an impressive first quarter, sales rose in April. In May, video game sales surged once again, according to the latest figures from NDP. Spending hit $977 million for hardware, full game sales and accessories, jumping 57% year over year. Not only did spending increase on video games but also on in-app purchases.

Industry Set to Soar Higher

According to Research and Markets, the global console games market is expected to grow from $40.6 billion in 2019 to about $57.9 billion in 2020. The major driving force for the console games market is the rapid increase in the number of active gamers across the world. In 2017, there were 2.21 billion gamers worldwide and the number is expected to reach 2.73 billion by 2021. According to Nielsen, 64% of the general population in the USA is gamers. 

Moreover, with the recent spike in coronavirus cases, it is likely that outdoor entertainment will not resume anytime soon. Video games will thus continue to dominate the entertainment space with social distancing norms likely to continue for some more time.

Our Choices

Given this sudden surge in sales and upbeat sentiment in the video gaming industry, it makes for an opportune time to invest in gaming stocks that are sure to gain in the near term.

Activision Blizzard, Inc. (ATVI - Free Report) is a leading developer and publisher of console, online and mobile games. The company’s Call of Duty is one of the most-popular gaming franchises globally. Its Overwatch League can be considered a pioneer of the e-sports concept.

The company’s expected earnings growth rate for the current year is 23.1%. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the past 30 days.  Activision Blizzardcarries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DouYu International Holdings Limited (DOYU - Free Report) provides a game-centric live streaming platform. The company operates its platform on both PC and mobile apps. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 59.4% over the past 60 days.  DouYU has a Zacks Rank #2.

Capcom Co., Ltd. (CCOEY - Free Report) plans, develops, manufactures, sells and distributes consumer video game. Its operating segment consists of Digital Contents, Arcade Operations, Amusement Equipments and Other Businesses segments.

The company’s expected earnings growth rate for the current year is 14.5%. Its shares have gained 8% over the past 30 days.  Capcom has a Zacks Rank #2.

Tencent Holding Ltd. (TCEHY - Free Report) develops software and operates online games. It also provides information technology, information system integration, asset management, online literature and online music entertainment services.

The company’s expected earnings growth rate for the current year is 24.5%. The Zacks Consensus Estimate for current-year earnings has improved 3.6% over the past 60 days.  Tencent has a Zacks Rank #1.

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