In this article, we will be looking at the 11 best gaming stocks to buy now.
If you’re tired of reading about how the coronavirus pandemic has adversely affected various industries and sectors across the globe, then you might have just stumbled across the perfect article. While almost every industry in the world has been suffering losses because of the pandemic, the video game industry can be considered one of the winners who have benefited from stay-at-home and lockdown restrictions imposed globally. As more people had to comply with social distancing, more people also began getting the time to play the games they couldn’t before, due to which the global gaming market was able to reach $162.32 billion last year. Game downloads across the world also went up 75% from 2019 to 2020, while watch time for live streams went up by 45% in the same time frame.
The pandemic ended up helping the gaming industry grow even larger than it had been previously. As older players who had not been able to find the time to play games before lockdown impositions came back, joined by newer gamers and even heavy gaming addicts, the gaming industry was able to see unprecedented growth. Electronic Arts Inc. (NASDAQ: EA) reported their strongest quarterly sales in the company’s 38-year history last June, as more people were forced to stay home and keep themselves entertained. The company also saw an eye-popping 87% increase in net bookings during the quarter, shocking everyone including company executives who claimed the June quarter was normally one of their “quietest.”
Owing to the increased popularity among not only children but adults as well, it is unsurprising that the gaming industry is going through such a boom. Bloomberg also reported this year that the video and mobile gaming industry may be one of the most lucrative industries on Wall Street. They noted that nowadays, many first-generation gamers are all grown up and exercise a sizeable spending power when it comes to video games, and so gaming can no longer be considered mere child’s play. Bloomberg has also cited a Mordor report which stated that global gaming market may exceed $256 billion by 2025, growing at a CAGR of 9.17% between 2020 to 2025. Additionally, the fact that gamers in the US stated that they had spent 45% more time on video games during quarantine and lockdown makes the above much more believable.
In light of the above, companies like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTC: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN) are profiting more off of the lucrative gaming market. Even Amazon.com, Inc. (NASDAQ: AMZN), despite actually being a tech retail giant, has been able to reap the benefits of the COVID-19-influenced gaming industry boom with its Prime Gaming segment.
Because of the pandemic, the entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 28th, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Without further ado, let’s look at the 11 best gaming stocks to buy now. The stocks added to our list were selected on the basis of hedge fund sentiment, analysts’ ratings, fundamentals, and growth potential based on core business strengths.
Best Gaming Stocks to Buy Now
11. The9 Limited (NASDAQ: NCTY)
Number of Hedge Fund Holders: 5
The9 Limited (NASDAQ: NCTY) is a Chinese internet company with a focus on developing cryptocurrencies mining business and proprietary or licensed online games. The company mainly deals with mobile and TV games and is ranked 11th on our list of the best gaming stocks to buy now.
This March, The9 Limited (NASDAQ: NCTY) signed a $2 million Filecoin mining machine purchase agreement which is expected to increase the company’s storage mining power. The company has also signed other MOUs, purchase deals, and acquisition agreements to gain more bitcoin mining machines, a $5.7 million Chia cryptocurrency mining machine, and a Canadian clean energy cryptocurrency mining company called Montcrypto as well, through April to June.
The stock has been on the rise in light of these deals and was leading consumer gainers on June 4th. The9 Limited (NASDAQ: NCTY) released its FY results, reporting a revenue of $0.09 million, and an EPS of $0.37 this March. The stock has gained 331.36% in the past 6 months and 130.66% year to date.
By the end of the first quarter of 2021, 5 hedge funds held stakes in The9 Limited (NASDAQ: NCTY) worth roughly $8.85 million. This is compared to 1 hedge fund holder in the previous quarter with a total stake value of approximately $133,000. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
10. HUYA Inc. (NYSE: HUYA)
Number of Hedge Fund Holders: 13
HUYA Inc. (NYSE: HUYA) is an electronic gaming company operating game live streaming platforms in China. The company’s platforms allow broadcasters and viewers alike to interact with each other during the live stream, which also broadcasts other entertainment content like talent shows and anime. The company ranks 10th on our list of the best gaming stocks to buy now.
HUYA Inc. (NYSE: HUYA) has agreed to acquire DouYu International Holdings Limited (NASDAQ: DOYU), and the deal is set to close this year. In the first quarter of 2021, HUYA Inc. (NYSE: HUYA) had an EPS of $0.17, beating estimates by $0.04. Its revenue of $405.38 million was up 19.15% year over year and beat estimates by $6.81 million. HUYA Inc. (NYSE: HUYA) has a gross profit margin of 20.77%.
By the end of the first quarter of 2021, 13 hedge funds held stakes in HUYA Inc. (NYSE: HUYA) worth roughly $335 million. This is compared to 12 hedge funds in the previous quarter with a total stake value of approximately $341 million. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
9. Avid Technology, Inc. (NASDAQ: AVID)
Number of Hedge Fund Holders: 22
Avid Technology, Inc. (NASDAQ: AVID) is a developer of software and integrated solutions for video and audio content creation, management, and distribution across the globe. Avid Technology, Inc. (NASDAQ: AVID)’s products include the Media Composer, Avid NEXIS shared storage systems, and Maestro solutions for the integration of virtual sets and augmented reality, among others, which it provides to the gaming industry as well. Avid Technology, Inc. (NASDAQ: AVID) ranks 9th on our list of the best gaming stocks to buy now.
This May, Jefferies raised its price target on Avid Technology, Inc. (NASDAQ: AVID) to $33 after an investor day event which showed an improvement in the company’s fundamental profile. B. Riley holds a Buy rating on the stock with a Street-high price target of $35. In the first quarter of 2021, Avid Technology, Inc. (NASDAQ: AVID) had an EPS of $0.28, beating estimated by $0.07. The company also brought in $94.36 million in revenue, up 9.15% year over year and beating estimates by $3.78 million, and it has a gross profit margin of 64.22%. The stock has gained 148.71% in the past 6 months and 170.71% year to date.
By the end of the first quarter of 2021, 22 hedge funds held stakes in Avid Technology, Inc. (NASDAQ: AVID) worth roughly $319 million. This is compared to 26 hedge funds in the previous quarter with a total stake value of approximately $252 million. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
8. SciPlay Corporation (NASDAQ: SCPL)
Number of Hedge Fund Holders: 23
SciPlay Corporation (NASDAQ: SCPL) is a developer of social games for mobile and web platforms across the globe. The company’s games include social casino games like Jackpot Party Casino and casual games like MONOPOLY slots. It ranks 8th on our list of the best gaming stocks to buy now.
In the first quarter of 2021, SciPlay Corporation (NASDAQ: SCPL) had an EPS of $0.22, missing estimates by -$0.03. The company’s revenue was $151.1 million, a 27.73% increase year over year, and beating estimates by $5.87 million. The company has a gross profit margin of 68.37% and the stock has gained 25.5% in the past 6 months and 19.2% year to date.
By the end of the first quarter of 2021, 23 hedge funds held stakes in SciPlay Corporation (NASDAQ: SCPL) worth roughly $95.5 million. This is compared to 25 hedge funds in the previous quarter with a total stake value of approximately $106 million. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), this is a good gaming stock to invest in.
7. Take-Two Interactive Software, Inc. (NASDAQ: TTWO)
Number of Hedge Fund Holders: 41
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is a developer of interactive entertainment solutions worldwide. The company’s labels include Rockstar Games, 2K, Private Division, Social Point, and Playdots. It ranks 7th on our list of the best gaming stocks to buy now.
On June 24th, Take-Two Interactive Software, Inc. (NASDAQ: TTWO) traded higher after receiving a Buy rating at MoffettNathanson with a $214 price target indicated a 23% upside. Earlier this month, the stock was also upgraded to Buy at Jefferies, with a $231 price target, while the company also acquired Nordeus in a $378 million deal. Last month, the stock had been among software gainers because of its latest earnings report where it exceeded expectations. In its fiscal fourth-quarter 2021 report, Take-Two Interactive Software, Inc. (NASDAQ: TTWO) had an EPS of $ 1.43, beating estimates by $0.75. Its revenue of $784.53 million, up 7.56% year over year, beat estimates by $115.91 million. The company has a gross profit margin of 55.64% and Take-Two Interactive Software, Inc. (NASDAQ: TTWO) has gained 27.61% in the past year as well.
By the end of the first quarter of 2021, 41 hedge funds held stakes in Take-Two Interactive Software, Inc. (NASDAQ: TTWO) worth roughly $822 million. This is compared to 55 hedge fund holders in the previous quarter with a total stake value of approximately $1.51 billion. Like Electronic Arts Inc. (NASDAQ: EA), Nintendo Co., Ltd. (OTCMTKS: NTDOY), Activision Blizzard, Inc. (NASDAQ: ATVI), and Amazon.com, Inc. (NASDAQ: AMZN), Take-Two Interactive Software, Inc. (NASDAQ: TTWO) is a good gaming stock to invest in.
6. Nintendo Co., Ltd. (OTCMTKS: NTDOY)
Number of Hedge Fund Holders: N/A
Nintendo Co., Ltd. (OTCMKTS: NTDOY) is a developer and manufacturer of electronic entertainment products in Japan, the US, Europe, and internationally. The company has several gaming platforms to offer, and it ranks 11th on our list of the best gaming stocks to buy now.
This May, Bloomberg reported that Nintendo Co., Ltd. (OTCMKTS: NTDOY) could be ready with their latest Switch console by September, while production would be starting in July. The new Switch may be more expensive than older models worth $299 and will be equipped with an upgraded NVIDIA Corporation (NASDAQ: NVDA) chip with next-generation tech.
Bloomberg reports have mentioned that the new Switch would support Deep Learning Super Sampling to offer higher fidelity graphics and efficiency. The system would support 4K graphics on a Switch plugged into a compatible TV. Universal Studios Japan has also opened up Super Nintendo World this year, despite initial delays because of the pandemic.
In its fiscal third-quarter 2021 report, Nintendo Co., Ltd. (OTCMKTS: NTDOY) had an EPS of $1.64, beating estimates by $0.27, while its $6.05 billion revenue, up 13.85% year over year, beat estimates by $459.52 million. The company has a gross profit margin of 55.17% and the stock has gained 30.77% in the past twelve months.
Anabatic Fund recently released its Q4 2020 investor letter, where they mentioned Nintendo Co., Ltd. (OTCMKTS: NTDOY). Here’s what they said:
“We established a new investment in Nintendo (NTDOY) during the second quarter of 2020, and it is now our third-largest investment. E-sports and video games are a hot sector right now, and the pandemic helped. “Nintendo Switch” was the #1 search on Amazon as the pandemic took hold – “Laptop” and “Airpods” came in 2nd and 3rd, respectively – but the Switch was a runaway hit before the pandemic and should be a mainstay for years to come.29
Our investment is based on a few simple ideas that have roots going back several decades. Nintendo may be trendy right now, but it’s an old company that has managed an impressive blend of long-term stewardship and continuous innovation. Nintendo’s portfolio long-lived characters and intellectual property should produce a growing stream of earnings and cash flow for many, many years. In this investment duration is clearly on our side.” (Click here to see the full text)
5. Electronic Arts Inc. (NASDAQ: EA)
Number of Hedge Fund Holders: 44
Electronic Arts Inc. (NASDAQ: EA) is a developer of games, content, and services for gaming consoles, computers, phones, and tablets across the globe. Some of its brands include Battlefield, The Sims, Need for Speed. The company ranks 5th on our list of the best gaming stocks to buy now.
Electronic Arts Inc. (NASDAQ: EA) announced on June 9th that Battlefield 2042 is set to launch by October 22nd, and on June 23rd, the company also mentioned its acquisition of Playdemic from WarnerMedia for $14 billion. In its fiscal fourth quarter of 2021 report, Electronic Arts Inc. (NASDAQ: EA) had an EPS of $1.23, beating estimates by $0.18. The company’s revenue was $1.49 billion, up 22.84% year over year and beating estimates by $95.28 million. It has a gross profit margin of 73.46% and the stock has gained 0.35% in the past 6 months and 3.29% year to date.
By the end of the first quarter of 2021, 44 hedge funds held stakes in Electronic Arts Inc. (NASDAQ: EA) worth roughly $14.3 billion. This is compared to 50 hedge fund holders in the previous quarter with a total stake value of approximately $10.5 billion.
Artisan Partners, a high value-added investment management firm, mentioned Electronic Arts Inc. (NASDAQ: EA) in its first-quarter 2021 investor letter. Here’s what they said:
“Video game publisher Electronic Arts (EA) has recently experienced muted performance relative to peers. The company is expanding its moat as COVID-19 pulled forward gamer engagement in 2020 and early 2021. While we expect current growth rates will slow, the long-term value of the company’s user community has increased. EA’s net cash balance sheet and industry leadership fit well with our philosophy and process, and while the recently acquired Codemasters and GLUU Mobile will draw down cash, the balance sheet remains strong and the deals further EA’s mobile growth strategy. We believe our stake in EA represents how we can think opportunistically to build an eclectic, idiosyncratic portfolio to deliver value over the long term.”
4. Zynga Inc. (NASDAQ: ZNGA)
Number of Hedge Fund Holders: 47
Zynga Inc. (NASDAQ: ZNGA) is a gaming company providing social game services in the US and internationally. It develops and operates social games as live services on mobile platforms like the Apple iOS and Google Android operating systems. The company ranks 4th on our list of the best gaming stocks to buy now.
This May, Zynga Inc. (NASDAQ: ZNGA) was upgraded to Buy at BofA after the company released its strong first-quarter earnings. The price target for the company is not $13.5 at the firm. The company also beat bookings and revenue estimates in Q1, leading to it gaining in the aftermath. Zynga Inc. (NASDAQ: ZNGA) also announced this May that it would be acquiring Chartboost for $250 million and gain the firm’s audience of over 700 million monthly users and 90 billion monthly ad auctions in the process. In the first quarter of 2021, Zynga Inc. (NASDAQ: ZNGA) had an EPS of $0.13, beating estimates by $0.04, while its revenue was $680.3 million, up 68.49% year over year, and beat estimates by $40.21 million. The company has a gross profit margin of 58.85% while the stock has gained 9.22% in the past 6 months and 10.34% year to date.
By the end of the first quarter of 2021, 47 hedge funds held stakes in Zynga Inc. (NASDAQ: ZNGA) worth roughly $11.4 billion. This is compared to 52 hedge fund holders in the previous quarter with a total stake value of approximately $10.02 billion.
Artisan Partners Limited Partnership, a high value-added investment management firm, mentioned Zynga Inc. (NASDAQ: ZNGA) in its fourth-quarter 2020 investor letter. Here’s what they said:
“We also added to our position in Zynga. Our multiyear investment campaign in Zynga has been based on a new management team’s ability to drive steady growth in the company’s base portfolio of games, expand margins, reinvigorate the new game development pipeline and use its strong balance sheet to acquire complementary games and studios. Shares have been pressured in recent quarters, presumably because of investor concerns about the company’s moderating growth rate and Apple’s pending new privacy policy which will make it more difficult for Zynga to both efficiently acquire new players and sell advertising in its games. We believe the company has multiple growth levers it can pull in the periods ahead, including the rollout of new games, acquisitions, further penetration into international markets and entry into new gaming categories, to name a few. Furthermore, our research suggests the Apple privacy policy change is manageable for larger mobile game developers such as Zynga. Given our strong conviction in the profit cycle, we used recent weakness to add to our position.”
3. Bilibili Inc. (NASDAQ: BILI)
Number of Hedge Fund Holders: 53
Bilibili Inc. (NASDAQ: BILI) is a provider of online entertainment services in China. The company’s platform has content like video services, mobile games, value-added services, and ACG-related comic and audio content. It ranks 3rd on our list of the best gaming stocks to buy now.
This May, Bilibili Inc. (NASDAQ: BILI) rose in light of strong Q1 results where the company beat top and bottom-line estimates and offering promising Q2 guidance. For the second quarter, Bilibili Inc. (NASDAQ: BILI) is expecting between $657 million to $673 million in revenue. This April, the stock was upgraded to Outperform at Credit Suisse as well. In the first quarter of 2021, Bilibili Inc. (NASDAQ: BILI) had an EPS of -$0.39, beating estimates by $0.06. The company’s revenue was $604.71 million beat estimates by $21.66 million and represented an 85.43% growth year over year. It has a gross profit margin of 23.91% and the stock has gained 46.48% in the past 6 months and 32.53% year to date.
By the end of the first quarter of 2021, 53 hedge funds held stakes in Bilibili Inc. (NASDAQ: BILI) worth roughly $30.1 billion. This is compared to 46 hedge fund holders in the previous quarter with a total stake value of approximately $30.8 billion.
2. Activision Blizzard, Inc. (NASDAQ: ATVI)
Number of Hedge Fund Holders: 76
Activision Blizzard, Inc. (NASDAQ: ATVI) is a developer of interactive entertainment content and services in the US, Europe, the Middle East, Africa, and the Asia Pacific. The company ranks 2nd on our list of the best gaming stocks to buy now.
This June, MoffettNathanson upgraded Activision Blizzard, Inc. (NASDAQ: ATVI) to Buy with a $124 price target indicating a 34% upside, in light of the company’s stable cash flows and net cash position. The stock was also upgraded to Outperform at BMO Capital markets this May. In the first quarter of 2021, Activision Blizzard, Inc. (NASDAQ: ATVI) had an EPS of $0.84, beating estimates by $0.15. The company’s revenue was $2.07 billion, up 35.74% year over year, and beat estimates by $285.55 million. Activision Blizzard, Inc. (NASDAQ: ATVI) has a gross profit margin of 72.79% and has gained 2.97% in the past 6 months and 6.35% year to date.
By the end of the first quarter of 2021, 76 hedge funds held stakes in Activision Blizzard, Inc. (NASDAQ: ATVI) worth roughly $35.8 billion. This is compared to 81 hedge fund holders in the previous quarter with a total stake value of approximately $37.3 billion.
Cooper Investors, an investment management firm, mentioned Activision Blizzard, Inc. (NASDAQ: ATVI) in their first-quarter 2021 investor letter. Here’s what they said:
“The portfolio established a position in video game publisher Activision Blizzard. As a watchlist company we have followed Activision for several years. As a reminder the role of the watchlist is to allow us to focus on a select group of companies where we seek to observe important signals around either value latency, industry trends or management behaviour that portend attractive investment propositions.
Technology can often play a disruptive role in content, however video games are a clear beneficiary of technology, both in terms of more immersive and realistic gaming experiences as well as the monetisation opportunities this creates.
In order to benefit from these trends, video game publishers must be owners of unique IP. Activision Blizzard fits this bill perfectly boasting a portfolio which includes franchises such as Call of Duty, World of Warcraft and Diablo just to name a few.” (Click here to see the full text)
1. Amazon.com, Inc. (NASDAQ: AMZN)
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ: AMZN) is a tech giant operating in the retail sale of consumer products and subscriptions in the US and internationally. The company’s Prime Gaming segment offers users free games, in-game loots, and a free subscription on Twitch.tv. It ranks 1st on our list of the best gaming stocks to buy now.
On June 29th, Amazon.com, Inc. (NASDAQ: AMZN) acquired SmartLess rights for about $60-80 million, with new episodes due to appear on Amazon Music and Wondery this August. This month, Switzerland’s leading telecom company Swisscom also picked Amazon.com, Inc. (NASDAQ: AMZN) as its partner in public cloud provision. In the first quarter of 2021, Amazon.com, Inc. (NASDAQ: AMZN) had an EPS of $15.79, beating estimates by $6.15. The company’s revenue of $108.52 billion was up 43.82% year over year and beat estimates by $3.89 billion. The stock has gained 5.87% in the past 6 months and 8.21% year to date, while Amazon.com, Inc. (NASDAQ: AMZN) also has a gross profit margin of 40.48%.
By the end of the first quarter of 2021, 243 hedge funds held stakes in Amazon.com, Inc. (NASDAQ: AMZN) worth roughly $50.4 billion. This is compared to 273 hedge fund holders in the previous quarter with a total stake value of approximately $51.5 billion.
See also Top 10 Video Gaming Stocks To Buy Now and 15 Largest Gaming Companies In The World.
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Disclosure: None. 10 Best Gaming Stocks to Buy Now is originally published on Insider Monkey.
