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Videogame Sales to Grow on Lingering Coronavirus Crisis: 4 Winners

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

According to market research firm NDP Group, COVID-19 saw video games explode in popularity, as consumers were forced to stay at home and keep themselves entertained. And with the United States once again witnessing a spike in new coronavirus cases, videogame sales are likely to get a further 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. According to NDP Group, on a year-to-date basis, $29.4 billion worth of video games has been sold in the United States.

Mobile game sales on iPhones rose 44% in Japan and 20% in the European Union in July, according to data from Sensor Tower. Gaming sales in the United States in August increased 37% year over year to $3.3 billion, according to NPD Group. That’s the fifth straight month of a huge jump in sales compared to the same period in 2019.

The majority of the increase has been in content (the games themselves, either bought digitally or on discs), but sales of hardware (consoles and accessories) have also seen double-digit increases since the pandemic began. Consumers are buying more consoles, and those who already have consoles are buying more games to play on them.

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 United States 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 43.6%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days. Activision Blizzardcarries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Electronic Arts Inc. (EA - Free Report) is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). Itdistributes its gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals — Origin and Play4Free.

The company’s expected earnings growth rate for next year is 7.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. Electronic Artsholds a Zacks Rank #2.

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 3.6% 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 29%. The Zacks Consensus Estimate for current-year earnings has improved 6% over the past 60 days. Capcom has a Zacks Rank #2.

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