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Videogame Sales Record Best Q2, Increase YoY: 5 Winners

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Videogame sales have been on the rise for the past couple of months as the coronavirus pandemic has kept people confined to their homes. After an impressive first quarter, and rise in April and May, video game sales hit an all-time high in the second quarter, according to the latest figures from NDP.

The last quarter saw Americans spending record money on videogames, which helped the stocks in the space log solid gains. And with the United States still reeling under the coronavirus scare, videogame sales are likely to further get a boost.

Highest Q2 Spending on Gaming in U.S. History

According to new data from the NDP Group, the video game industry shattered sales records in the second quarter, with Americans spending a whopping $11.6 billion on games. This marked the highest total second-quarter spending on gaming in U.S. history.

The jump reflects a 30% year-over-year increase and a 7% increase from the first quarter. Total sales include video game hardware, software and accessories.

Consumers spent $10.2 billion on content, which includes both video games and downloadable content, up 28% from the same period last year. Console sales also increased year over year, despite a brief decline in June.

Sales of Nintendo Co.’s (NTDOY - Free Report) Switch, Microsoft Corporation’s (MSFT - Free Report) Xbox One and Sony Corporation’s PS4 saw a collective increase of 57% from last year to $848 billion.  Sales of accessories such as steering wheels, gamepads and headsets increased 50% to $584 million.

Industry Set to Soar Further

The second-quarter figures hint at the growing demand for video games. However, the spike in videogame sales is not recent. The first quarter was equally impressive when spending touched $10.9 million.

Coronavirus cases escalated in April and stay-at-home orders were enacted at the federal and state levels. Video games and streaming services became the only two sources of entertainment for millions. Although restrictions are being eased and the economy is slowly reopening, the fear of getting infected with no vaccine or cure in place as yet is likely to keep people at home for some more time. So, it is likely that people will once again fall back on video games to kill time.

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 United States is into video gaming.

Our Choices

This sudden surge in sales and upbeat sentiment in the video gaming industry makes this an opportune time to invest in gaming stocks that are poised for solid gains 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 39.6%. The Zacks Consensus Estimate for current-year earnings has improved 13.4% over the past 30 days.  Activision Blizzardsports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Electronic ArtsInc. (EA - Free Report) is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). It distributes gaming content and services through multiple distribution channels as well as directly to consumers through its online portals.

The company’s expected earnings growth rate for next year is 8.3%. The Zacks Consensus Estimate for current-year earnings has improved 7.6% over the past 60 days.  Electronic Arts has a Zacks Rank #2 (Buy).

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 7.8% over the past 30 days.  DouYU has a Zacks Rank #2.

TakeTwo Interactive Software, Inc. (TTWO - Free Report) is a leading developer and publisher of video games. The company earns revenues from the sale of disk-based video game products, downloadable contents, subscription, micro-transactions and advertising.

The company’s expected earnings growth rate for next year is 47.4%. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the past 30 days.  TakeTwo carries a Zacks Rank #2.

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

The company’s expected earnings growth rate for the current year is 21.7%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 30 days.  Capcom has a Zacks Rank #2.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>