As the coronavirus pandemic has been keeping people indoors, video games seem to have taken centerstage when it comes to at-home entertainment. In fact, there has been a substantial surge in video games and esports demand in the past few months.
Per Newzoo’s research report, video game sales totaled $148.8 billion worldwide in 2019 and is expected to hit $159.3 billion this year, with the coronavirus-led lockdown playing a major role. Technological breakthroughs have also helped the industry expand user base.
Home-Confinement Boosts Gaming Space
Technavio, which monitors the gaming software market, reported that the market is poised to grow by $65.19 billion during 2020-2024, at a CAGR of more than10%.
Top gaming companies have raised their revenue expectations for 2020 while many have already reported a surge in sales. Nintendo Co., Ltd. (NTDOY - Free Report) reported that profits in the first quarter of 2020 more than tripled from the previous quarter. The gaming giant sold a record 11.8 million units of Animal Crossing in March, making it the best Switch launch since the device was released in 2017.
What’s more? The Wedbush ETFMG Video Game Tech ETF (GAMR) fund hit a 52-week high on May 8and is up 37.6% from its 52-week low price of $35.50 per share.
Technology Plays Major Role
With customers looking for more ways to kill time indoors due to the current stay-at-home situation, gaming companies are trying their best to come up with improvised offerings. Thanks to the recent technological breakthroughs, there has been drastic growth in the gaming space. Advancement and availability of 5G, AR, VR and cloud gaming are making things better.
In this case, 5G has been an absolute boon for video game streamers. The faster-than-ever has been enhancing the experience for gamers with almost no lag and significantly improved graphics.
Development in AR and VR has been focused on gaming and entertainment for long now. Though the technologies have found application across a diverse range of industries, including education and training, its usage in the gaming industry is significantly high. Notably, AR/VR provides an immersive gaming experience that is almost akin to a second reality.
Per the ResearchAndMarkets’ Augmented Reality & Mixed Reality Market - Growth, Trends, and Forecast (2020 - 2025) report, the AR & MR market was valued at $2.98 billion in 2019 and is expected to reach $27.44 billion by 2025, at a CAGR of 44.7%.
Now, another factor impacting the gaming industry is cloud technology. One can now stream games through the cloud without any hardware, installation or cables.
5 Must-Buy Gaming Stocks
Given the buoyant phase in the gaming industry, we have shortlisted five must-buy gaming stocks that are sure to enjoy a boom. These stocks carry a Zacks Rank #2 (Buy) and belong to the Zacks Toys - Games - Hobbies industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Activision Blizzard, Inc. (ATVI - Free Report) develops and distributes content and services on video game consoles, personal computers, and mobile devices. The company’s expected earnings growth rate for the current year is 18.7% against the industry’s projected earnings decline of 2.5%. The Zacks Consensus Estimate for its current-year earnings has moved up 7.7 % over the past 60 days.
Electronic Arts Inc. (EA - Free Report) develops, markets, publishes, and distributes games, content, and services for game consoles, PCs, mobile phones, and tablets. The company’s expected earnings growth rate for the current quarter is more than 100% against the industry’s projected earnings decline of nearly 54%. The Zacks Consensus Estimate for its current-year earnings has climbed up 0.4% over the past 60 days.
Take-Two Interactive Software, Inc. (TTWO - Free Report) develops, publishes, and markets interactive entertainment solutions. The company’s expected earnings growth rate for the quarter ending June 2020 is 91.7% against the industry’s estimated earnings decline of nearly 54%. The Zacks Consensus Estimate for its current-year earnings has moved 0.2% up over the past 60 days.
Nintendo develops, manufactures, and distributes electronic entertainment products. The company’s expected earnings growth rate for the current year is 2% against the industry’s projected earnings decline of 2.5%. The Zacks Consensus Estimate for its current-year earnings has advanced 7.2% over the past 60 days.
Glu Mobile Inc. (GLUU - Free Report) develops, publishes, and markets a portfolio of free-to-play mobile games for the users of smart phones and tablet devices. The company’s expected earnings growth rate for the current year is 70.6% against industry’s estimated earnings decline of 2.5%. The Zacks Consensus Estimate for its current-year earnings has moved 11.5% north over the past 60 days.
Shares of Activision Blizzard, Electronic Arts, Take-Two Interactive, Nintendo and Glu Mobile have added 22.7%, 8.9%, 10.7%, 5.4% and 56%, respectively, against the S&P 500’s decline of 9.3% so far this year.
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.
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