3 Stocks That Will Benefit from New Video Game Consoles in 2020

GameStop Corp. (NYSE:GME)

We recently noted that shorts were dead wrong about GameStop, and this was precisely one of the reasons why: consoles are not dead, as has long been falsely predicted and this next console lifecycle will bring another much-needed jolt to GameStop Corp. (NYSE:GME)’s top-line, buying it several more years to figure out its direction while physical game sales continue to slide.

That is, if the company isn’t bought out first, as it’s reportedly exploring a sale. Either way, those are two positive potential catalysts for a stock that still looks ridiculously cheap despite its 24% gains in the past month, trading at a forward P/E of 5.51 and sporting a price/book ratio of 0.74 and dividend yield of nearly 11%.

Sony Corp (ADR) (NYSE:SNE)

Unlike rival Microsoft, Sony Corp (ADR) (NYSE:SNE)’s game business is far more integral to its overall success, accounting for about 30% of the company’s revenue (Xbox on the other hand contributes mere percentage points to Microsoft’s overall revenue). That means the potential spoils of Sony’s next console launch will be ripe for the taking by shareholders of the Japanese company’s ADRs. Since the PlayStation 4’s launch in late-2013, Sony’s shares have more than doubled in value, largely on the back of the console’s tremendous success.

Sony Corp (ADR) (NYSE:SNE) will arguably be even better positioned to dominate the gaming market with the PS5 than it was with the PS4, thanks to the expected backwards compatibility that PS5 will have with PS4 games, which wasn’t the case with PS4 & PS3 games.

Then there’s Sony’s PlayStation Plus subscription service, which had soared past 34 million gamers as of March, 25 million more than there were just four years earlier. Those gamers, which receive a selection of free games for all of Sony’s systems every month for so long as they remain members, have added incentive to remain within the Sony gaming ecosystem to retain access to all of those games.

Those could be tough hurdles for Microsoft and Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) to overcome in the next console generation, which is why our money’s on Sony to build further on its success and cement its status as the dominant force in console gaming.

Disclosure: None