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Fetch Solid Returns Via 4 Bets Amid Coronavirus-Led Gaming Surge

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With large portions of the world’s population locked at home due to the coronavirus pandemic, the demand for video games for entertainment is shooting up dramatically.

Notably, videogame sales, particularly that of Nintendo’s (NTDOY - Free Report) Animal Crossing: New Horizons and Activision Blizzard’s Call of Duty: Modern Warfare, hit a record high in March. Per NPD data, sales of gaming hardware, software and accessories in the United States increased 35% year over year to $1.6 billion in the month.

According to NPD’s best-selling games list, Animal Crossing: New Horizons held the top position, followed by Call of Duty: Modern Warfare. Take-Two Interactive Software’s (TTWO - Free Report) NBA 2K20 and Sony's baseball simulation game MLB: The Show 20 were also among the most sold games. Besides, digital game downloads were up 52.9% in 50 markets, excluding Doom Eternal and Animal Crossing: New Horizons.

Notably, since January, most of China’s popular games have been witnessing increasing playtime and in-game purchases, as noted by Nomura analyst, Jialong Shi. Moreover, 29% of U.S. gamers are spending more hours playing games over the web with friends, per a Nielsen Games survey, cited by The Hollywood Reporter. Besides, 42% of U.S. gamers are buying digital games amid the coronavirus-led lockdown.

Gaming Console Sales Also Get a Boost

Notably, the current stay-at-home arrangement is urging people to buy existing gaming consoles instead of waiting for new releases. Per NPD, sales of gaming consoles, including Microsoft’s (MSFT - Free Report) Xbox One, Sony’s PlayStation 4 and Nintendo Switch, grew 63% year over year to $461 million in March.

New-generation consoles — Microsoft Corp's Xbox Series X and Sony's PlayStation 5 — are likely to hit the market at the end of the year.

Furthermore, NPD noted that sales of consoles rose a whopping 285.6% in Australia, 250% in the U.K., 140.6% in France, 84% in Italy and 66% in Spain.

Gaming Stocks to Focus

The fear of the pandemic has single-handedly slowed down the global economy, hurting numerous businesses. However, some sectors are actually benefiting from the coronavirus scare as people have been shifting from outdoor activities to online entertainment, such as videogames, live streaming, social networking and other internet-based services.

The online gaming industry is poised to benefit more than others from this coronavirus-induced disruption.

Here we discuss four gaming stocks that are well poised for further growth amid the coronavirus crisis.

Notably, all four stocks have outperformed the S&P 500 composite on a year-to-date basis.

 

Nintendo is expected to gain an edge from the popularity of its Switch video game console. The company also expanded its console offerings with the release of Switch Lite in September 2019. Moreover, the company’s partnership with Tencent, which allows the latter to publish Super Mario Odyssey and Mario Kart 8 Deluxe in China, the world’s largest gaming market, bodes well.

On a year-to-date basis, the Zacks Rank #2 (Buy) stock has gained 10.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Take-Two Interactive is expected to gain traction from sturdy demand for NBA 2K20 and NBA 2K19, Grand Theft Auto Online and Grand Theft Auto V, Red Dead Redemption 2 and Red Dead Online, and Sid Meier’s Civilization VI plus WWE SuperCard and WWE 2K20. Games like Borderlands 3, Ancestors: The Humankind Odyssey and The Outer Worlds further strengthened its portfolio.

On a year-to-date basis, the Zacks Rank #3 (Hold) stock has gained 2.6%.

Another stock, which is poised to benefit from the coronavirus-led quarantine, is Activision Blizzard. Strong popularity of franchises like Call of Duty and Hearthstone is expected to boost in-game spending, thereby driving net bookings and the top line of this Zacks Rank #3 company in the near term. Further, the King division is benefiting from strength in the Candy Crush franchise’s popular games like Candy Crush Saga and Candy Crush Friends Saga.

On a year-to-date basis, Activision has gained 10.6% %.

Also, Zynga’s expanding mobile gaming portfolio is expected to drive near-term growth amid the coronavirus outbreak. Tremendous response for games such as Farmville 3 and Merger Magic! is a positive.

This Zacks Rank #3 stock has gained 22.7% on a year-to-date basis.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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