12 Best Gaming Stocks To Buy Now

Published on October 14, 2022 at 12:32 pm by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 best gaming stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Gaming Stocks To Buy Now.

According to PwC’s Global Entertainment and Media Outlook, the gaming industry is rapidly growing and the sector is anticipated to reach $321 billion by 2026. The expansion is supported by millions of people who got involved with gaming to escape the isolation of COVID-19 lockdowns. Gaming was one of the safest ways to maintain social connections amid the pandemic-driven chaos, and the sector has not lost steam despite lockdowns lifting worldwide.

Existing and new gamers poured into games, consoles, and other gaming equipment during the pandemic, and resultantly, the market grew by 26% between 2019 and 2021. Companies timed their new releases and game launches strategically to gain from the pandemic boom. For example, Nintendo’s Animal Crossing: New Horizons was launched in March 2020 and within the first six weeks, 13.4 million units were sold. It features as one of the best-selling Nintendo Switch games.

As per latest data published by DataReportal, internet traffic rose by 7.7% in 2021 compared to 2020. Moreover, the number of internet users grew by 4% to 4,950 million in January 2022 compared to the same period last year, when the users equaled 4,758 million. Using cloud technology in the gaming market will potentially boost the demand and engagement of multiplayers for numerous games, which will support further market growth. Some of the best gaming stocks to consider in order to play the boom in the sector include Sea Limited (NYSE:SE), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA).

Our Methodology

We selected the following gaming stocks based on positive analyst coverage, strong business fundamentals, and future growth prospects. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022.

Photo by Erik Mclean on Unsplash

Best Gaming Stocks To Buy Now

12. Nintendo Co., Ltd. (OTC:NTDOY)

Number of Hedge Fund Holders: 2

Nintendo Co., Ltd. (OTC:NTDOY) was founded in 1889 and is headquartered in Kyoto, Japan. The company develops, manufactures, and sells home entertainment products in Japan, the Americas, Europe, and internationally. Nintendo Co., Ltd. (OTC:NTDOY) provides video game platforms, playing cards, handheld and home console hardware systems, and related software. A depreciating yen will act as a tailwind for Nintendo Co., Ltd. (OTC:NTDOY)’s reported financials.

On September 7, Goldman Sachs analyst Minami Munakata resumed coverage of Nintendo Co., Ltd. (OTC:NTDOY) with a Buy rating and an 83,000 yen price target. The analyst expects Nintendo Co., Ltd. (OTC:NTDOY) to sustain an elevated level of earnings, even in the midst of the product cycle for Nintendo Switch, the analyst told investors.

According to Insider Monkey’s second quarter database, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management and Frederick Disanto’s Ancora Advisors collectively held stakes worth $738,000 in Nintendo Co., Ltd. (OTC:NTDOY).

Like Sea Limited (NYSE:SE), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Nintendo Co., Ltd. (OTC:NTDOY) is one of the best gaming stocks to buy now.

Here is what Ensemble Capital has to say about Nintendo Co., Ltd. (OTC:NTDOY) in its Q3 2021 investor letter:

“Nintendo: Having had a banner year and a quarter last year with both its Switch console sales and megahit Animal Crossing: New Horizons game release, helped in part by COVID restrictions, Nintendo posted sales that were down -10% vs a year ago while operating income was down -17%. Consequently, the stock has had a challenged performance in the quarter, falling 19%. However, looking past the one-time nature of the comparison effects of the COVID bump last year, the more important fundamental metric to track for the company’s future business is its installed base of Switch consoles. The Switch installed base of customers has grown by about 50 million units to over 85 million since 2019, aided by a surge in interest in family gaming. We believe the family gaming trend is an important and persistent one and the huge increase in the installed base bodes well for future game and digital subscription sales going forward.”

11. Corsair Gaming, Inc. (NASDAQ:CRSR)

Number of Hedge Fund Holders: 10

Corsair Gaming, Inc. (NASDAQ:CRSR) is a California-based company that designs, markets, and distributes gaming and streaming equipment, components, and systems in the Americas, Europe, the Middle East, and the Asia Pacific. The company offers gaming peripherals such as gaming keyboards, mice, headsets, controllers, capture cards, stream decks, USB microphones, studio accessories, and EpocCam software. Corsair Gaming, Inc. (NASDAQ:CRSR) is one of the best gaming stocks to invest in.

After Corsair Gaming, Inc. (NASDAQ:CRSR) negatively pre-announced its Q2 revenue and adjusted EBITDA along with its earnings date announcement, Wedbush analyst Michael Pachter noted that slower user growth will likely extend Corsair Gaming, Inc. (NASDAQ:CRSR)’s upgrade cycle in the short-term, though he acknowledged that Q2 is “likely the trough.” The analyst, who expects a return to “normal” in 2023 “at the latest,” reiterated an Outperform rating and a $22 price target on Corsair Gaming, Inc. (NASDAQ:CRSR) shares. He is positive that Corsair Gaming, Inc. (NASDAQ:CRSR) has developed a “defensible niche” with a majority of its sales originating from “a small, but dedicated and growing base of hard-core gamers.”

According to Insider Monkey’s data, 10 hedge funds were long Corsair Gaming, Inc. (NASDAQ:CRSR) at the end of Q2 2022, compared to 12 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent position holder in the company, with 547,574 shares worth $7.19 million.

Here is what Sterling Partners Equity Advisors has to say about Corsair Gaming, Inc. (NASDAQ:CRSR) in its Q4 2021 investor letter:

“Corsair Gaming is a global developer and manufacturer of high-performance gear and technology for gamers, content creators, and PC enthusiasts. Corsair delivers a full ecosystem of products; PC Components, Peripherals, Premium Streaming Equipment, and Smart Ambient Lighting. Corsair responded to the difficult sourcing and shipping environment by building inventory closer to its customers. Management believes that once this difficult supply chain is behind them their targeted growth and profitability targets will return. We believe in the growing gaming market globally and Corsair is positioned well to support this growing customer base with a platter of products.”

10. Golden Entertainment, Inc. (NASDAQ:GDEN)

Number of Hedge Fund Holders: 21

Golden Entertainment, Inc. (NASDAQ:GDEN) is headquartered in Las Vegas, Nevada, and the company is engaged in the ownership and operation of a diversified entertainment platform in the United States. Golden Entertainment, Inc. (NASDAQ:GDEN) has four key segments – Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort, and Distributed Gaming. The Distributed Gaming segment operates slot machines and amusement devices in non-casino locations, including restaurants, bars, liquor stores, and grocery stores.

Jefferies analyst Cassandra Lee on September 7 assumed coverage of Golden Entertainment, Inc. (NASDAQ:GDEN) with a Buy recommendation and a $64 price target. Given the company’s “balance sheet strength and strong fundamentals” across regional markets in Nevada, it could chase growth more intensely or increase shareholder returns with the proceeds from Rocky Gap sale, “either of which imply continued upside,” the analyst told investors in a bullish thesis.

Among the hedge funds tracked by Insider Monkey, 21 funds reported owning stakes worth $163.6 million in Golden Entertainment, Inc. (NASDAQ:GDEN) at the end of June 2022, compared to 21 in the prior quarter worth $276.2 million. Richard Driehaus’ Driehaus Capital is the leading position holder in the company, with 1.13 million shares valued at nearly $45 million.

9. PENN Entertainment, Inc. (NASDAQ:PENN)

Number of Hedge Fund Holders: 33

Next on our list of the best gaming stocks is PENN Entertainment, Inc. (NASDAQ:PENN), a Pennsylvania-based company that provides integrated entertainment, sports content, and casino gaming experiences in North America. On October 10, PENN Entertainment, Inc. (NASDAQ:PENN) signed a new leasing arrangement with Gaming and Leisure Properties, Inc. (NASDAQ:GLPI) to promote casino growth and relocations. The transaction is subject to regulatory approvals and is expected to be effective from January 1, 2023.

On October 6, Canaccord analyst Jason Tilchen initiated coverage of PENN Entertainment, Inc. (NASDAQ:PENN) with a Buy rating and a $50 price target. Commercial gambling in the U.S. exceeded $50 billion in gross gaming revenue for the first time last year, noted the analyst, who forecasts the industry to nearly double over the next decade. At present levels, investors can access “a very reasonably valued, consistent, and strongly profitable regional casino business” with upside from the quickly expanding online sports betting and iGaming markets, the analyst added.

According to Insider Monkey’s data, 33 hedge funds were long PENN Entertainment, Inc. (NASDAQ:PENN) at the end of the second quarter of 2022, compared to 36 funds in the preceding quarter. Parag Vora’s HG Vora Capital Management is the largest stakeholder of the company, with 3.50 million shares worth $106.5 million.

Here is what Baron Funds specifically said about PENN Entertainment, Inc. (NASDAQ:PENN) in its Q2 2022 investor letter:

“PENN Entertainment, Inc. (NASDAQ:PENN) declined 28.3% in the quarter and penalized performance by 71 bps. This was due to investor concerns that a potential recession would result in a slowdown or decline in growth. The company has seen no material change to its visitation or spending levels, and its earnings remain strong. Penn is generating strong cash flow to more than offset investments in its digital growth opportunity. It is using excess cash to buy back its stock. Penn is well positioned to weather a slowdown or recession and, if one does occur, the company should still generate revenue and EBITDA above pre-pandemic levels.

Management continues to use its excess cash for share repurchases and debt reduction as well as continuing investments in its digital businesses. We think the $50 million of losses this year from its digital business is modest in relation to Penn’s $1 billion of casino EBITDA. The losses from its digital business represent customer acquisition costs incurred as additional states legalize online gambling. Since it is far less expensive to retain existing customers than to acquire new ones, we expect marketing costs to decline as Penn builds its customer base.

Penn’s core bricks and mortar casino business remains strong, and the company has a healthy regional casino business and a strong balance sheet to fund its digital losses.”

8. International Game Technology PLC (NYSE:IGT)

Number of Hedge Fund Holders: 34

International Game Technology PLC (NYSE:IGT) is a London-based company that provides gaming technology products and services in North America, Europe, the Middle East, Africa, Asia-Pacific, Latin America, and the Caribbean. The company has three primary segments – Global Lottery, Global Gaming, and Digital & Betting. On October 6, International Game Technology PLC (NYSE:IGT) announced that its cashless gaming solutions, Resort Wallet and IGTPay, were being used at Indigo Sky Casino in Wyandotte, Okla. International Game Technology PLC (NYSE:IGT) is helping multiple casino operators such as Indigo Sky Casino transition to cashless gaming and modernize the guest experience. It is one of the best gaming stocks to buy now.

On August 3, Deutsche Bank analyst Carlo Santarelli reiterated a Buy rating on International Game Technology PLC (NYSE:IGT) but trimmed the price target on the stock to $30 from $35 after the “solid” Q2 results.

Among the hedge funds tracked by Insider Monkey, International Game Technology PLC (NYSE:IGT) was part of 34 public stock portfolios at the end of Q2 2022, with collective stakes worth $263.5 million. John Overdeck and David Siegel’s Two Sigma Advisors is a significant position holder in the company, with 1.86 million shares valued at $34.6 million.

Here is what Palm Harbour Capital has to say about International Game Technology PLC (NYSE:IGT) in its Q4 2021 investor letter:

“The second largest contributor was International Game Technology, the ItalianAmerican lottery and slot machine company, which we introduced in our first quarter 2020 letter and which contributed 78 basis points to performance. Early in the quarter, IGT’s main competitor, the highly levered Scientific Games, entered into a definitive agreement to sell its lottery business to Brookfield Business Partners for total consideration of $6.1 billion in cash and contingent payout. At $471 million last twelve months EBITDA (admittedly COVID affected, excluding unallocated central costs), Scientific Games lottery business was sold at trailing 13.0x. Scientific Games exited the lottery business to optimize the portfolio and aggressively de-lever its balance sheet. We believe IGT’s lottery business to be much higher quality and certainly larger. If we were to use a similar metric for IGT, including all corporate costs but excluding Gaming and Digital and Betting, we would have around 90% upside. We are willing to bet the Gaming and fast growing Digital and Betting segments are worth something as well. It seems the sell-side willfully ignores this transaction and sticks with their 7-8x EV/EBITDA valuation.

The company reported third quarter earnings with sales up by 21% year on year, EBIT up by 144% and leverage down to 3.8x from 6.4x at year-end 2020. Total Adjusted EBITDA improved by 42% with margin gaining 618 basis points. Following the recovery, management reinstated the dividend of $0.20 per share…” (Click here to see the full text)

7. Boyd Gaming Corporation (NYSE:BYD)

Number of Hedge Fund Holders: 35

Featuring next on our list of the best gaming stocks is Boyd Gaming Corporation (NYSE:BYD), a Las Vegas-based multi-jurisdictional gaming company that owns entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. On September 15, Boyd Gaming Corporation (NYSE:BYD) declared a quarterly dividend of $0.15 per share, in line with previous. The dividend is payable on October 15, to shareholders of record as of September 30.

JMP Securities analyst Jordan Bender initiated coverage of Boyd Gaming Corporation (NYSE:BYD) on September 23 with an Outperform rating and a $65 price target. The macro backdrop in Nevada, including home prices and taxable sales, remains solid, driving a robust spend per head in the locals/downtown market where Boyd Gaming Corporation (NYSE:BYD) generates 39% of its earnings, the analyst told investors. He noted that Nevada is one of the healthiest gaming markets.

According to Insider Monkey’s Q2 data, 35 hedge funds were long Boyd Gaming Corporation (NYSE:BYD), compared to 40 funds in the earlier quarter. John W. Rogers’ Ariel Investments is a notable position holder in the company, with 3.35 million shares worth $167 million.

Here is what Baron Real Estate Fund has to say about Boyd Gaming Corporation (NYSE:BYD) in its Q2 2022 investor letter:

“Boyd Gaming Corporation is one of the largest and most successful casino entertainment companies in the U.S. The company owns and operates 28 casino gaming properties in 10 states with a large presence in Las Vegas. Business conditions have been strong, yet the shares are valued at only 6 times 2022 estimated cash flow versus a long-term average of more than 9 times cash flow. The company maintains a strong and liquid balance sheet. Insiders own approximately 27% of the company. We believe Boyd is a compelling acquisition target.”

6. Roblox Corporation (NYSE:RBLX)

Number of Hedge Fund Holders: 38

Roblox Corporation (NYSE:RBLX) was incorporated in 2004 and is headquartered in San Mateo, California. The company develops and operates an online entertainment, gaming, and educational platform. In August, Roblox Corporation (NYSE:RBLX) reported a year-over-year increase in daily active users, estimated bookings, and estimated revenue.

On October 13, BTIG analyst Clark Lampen maintained a Buy rating on Roblox Corporation (NYSE:RBLX) but lowered the price target on the shares to $51 from $58. The analyst updated his estimates ahead of the September metrics to factor in “more conservative monetization assumptions and sustained hourly monetization headwinds”. He remains optimistic on the stock in the longer term, citing his latest checks with mobile gaming developers and ad executives, who have been constructive on the opportunity for in-gaming advertising for Roblox Corporation (NYSE:RBLX).

According to Insider Monkey’s data, Roblox Corporation (NYSE:RBLX) was part of 38 hedge fund portfolios at the end of Q2 2022, compared to 40 funds in the prior quarter. Jim Simons’ Renaissance Technologies is the leading stakeholder of the company, with 11.6 million shares worth $380.5 million.

In addition to Sea Limited (NYSE:SE), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Roblox Corporation (NYSE:RBLX) is one of the best gaming stocks to play the boom in the sector.

Tao Value, an investment management firm, discussed the performance of Roblox Corporation (NYSE:RBLX) in its Q4 2021 investor letter. Here’s what the fund said:

“Roblox (RBLX) got significant more attention from both institutional & retail investors after Facebook announced to rename itself as Meta Platforms. I believe the price appreciation is largely attributed to the increased attention. On the business side, Roblox rolled out a few successful music events and also partnered with Netflix on testing long-form media consumption in the virtual world. Apple in its iOS 14.5 rolled out an impactful change for the digital advertising landscape by requiring all apps to ask users to “opt in”.

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