Amid A Correction In Video Game Stocks, These Are The 5 Names You Should Consider Buying

#3 Take-Two Interactive Software, Inc. (NASDAQ:TTWO)

Take-Two Interactive Software, Inc. (NASDAQ:TTWO) made its lifetime high of $37.71 earlier this month and currently trades flat for 2016. During the October-to-December period, the ownership of the company among investors we track inched up by one and the aggregate value of their holdings in it also saw a marginal increase of $9.9 million. However, billionaire David Einhorn’s Greenlight Capital reduced its stake in the company during the same time by 26% to 3.12 million shares. Several analysts who cover the stock currently feel that it will continue its bull run in the coming quarters because of the company’s competitive expansion strategy and its strong pipeline of games for the next two years. On February 8, analysts at Jefferies Group reiterated their ‘Buy’ rating on the stock, while upping their price target on it to $48 from $44.

– Investors with Long Positions (as of December 31): 36

– Aggregate Value of Investors’ Holdings (as of December 31): $914.95 million

#2 Activision Blizzard, Inc. (NASDAQ:ATVI)

– Investors with Long Positions (as of December 31): 53

– Aggregate Value of Investors’ Holdings (as of December 31): $3 billion

Amid a 25% rise in Activision Blizzard, Inc. (NASDAQ:ATVI)’s stock during the fourth quarter, investors in our system which were long the stock rose by ten, while the aggregate value of their holdings in the company increased by over 44%. With ownership of 12.78 million shares of the company, Philippe Laffont’s Coatue Management was its largest shareholder in our database at the end of December. Though shares of the company have fallen by over 18% so far this year, analysts and investors are not concerned. According to them,  the company will perform well in the long-run thanks to its bestselling franchises like ‘Call of Duty’, and is increasingly focusing on monetizing its content, while at the same time investing heavily in the future of gaming. Activision Blizzard, Inc. (NASDAQ:ATVI) also completed its $5.9 billion acquisition of King Digital last month, which marks a big move by Activision Blizzard into the mobile and social gaming arenas. The company’s stock currently sports an average rating of ‘Buy’ and an average price target of $37.88 from the 22 premier research institutions and analysts who cover it.

#1 Electronic Arts Inc. (NASDAQ:EA)

– Investors with Long Positions (as of December 31): 57

– Aggregate Value of Investors’ Holdings (as of December 31): $2.26 billion

After its ownership among the funds that we track rose by six during the fourth quarter, Electronic Arts Inc. (NASDAQ:EA) emerged as the most popular gaming stock heading into 2016. Unlike the double-digit losses registered by Activision Blizzard, Inc., shares of Electronic Arts Inc. (NASDAQ:EA) have fallen by only 6% this year. However, a few analysts feel that the chances of them falling further are higher compared to Activision’s, because Electronic Arts is currently trading at a trailing P/E of 34.10, which is rather expensive. For its fourth quarter of fiscal year 2016, analysts are expecting the company to report EPS of $0.43 on revenue of $890.37 million, while for the same quarter of the previous financial year it reported EPS of $0.37 on revenue of $896.00 million. Both D.E. Shaw and billionaire Stephen Mandel‘s Lone Pine Capital reduced their stakes in the company by 27% during the fourth quarter.

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