If we’re being honest, both proponents and critics will agree that 2017 was the year of bitcoin. The cryptocurrency concept exploded from niche tech communities into the mainstream. However, the digital markets are incredibly volatile. For those that want to invest in an exciting sector, but without bitcoin’s heavy, downside risk, consider video game stocks.
It’s a concept that older generations have trouble reconciling, but gaming is no longer an isolated, homebody activity. Today, this digital entertainment platform is a huge, multi-billion dollar industry. According to Forbes contributor Kevin Anderton, every state in the union has a gaming development or publishing company. Unsurprisingly, video game stocks are among the best-performing publicly traded securities.
For investors, the best news is that sector enthusiasm is only increasing. In a gallery piece featuring GameStop Corp. (NYSE:GME), I mentioned that electronic gaming could possibly become an Olympic sport. At the time, I dismissed this as cute, but unrealistic, speculation.
But now, the Japanese government have added fresh fire to the unlikely rumor. According to a Bloomberg report, Japan Prime Minister Shinzo Abe’s administration is pushing for full legalization of e-tournaments. Due to archaic laws, Japan has lagged behind other countries in integrating and embracing such events.
Should the law pass — and there’s no reason why it shouldn’t — video games as an Olympic sport is a step closer to reality. The latest rumors suggest that we could see gamers competing in the 2024 edition.
If that doesn’t get you excited about this sector’s future, nothing will. Here are three of the best video game stocks to buy for 2018!
Best Video Game Stocks to Buy: Electronic Arts
If you love real football (what we Yanks call “soccer”), placing Electronic Arts Inc. (NASDAQ:EA) in a best video game stocks to buy list is controversial. While many of their titles within the EA Sports category perform very well, the FIFA football series has always lagged. The end product hardly resembles how the beautiful game ebbs and flows.
However, when people buy sports-related video games, they are purchasing a fantasy: the ability to play in the top leagues with world-famous athletes. So why on earth would you shell out top dollar to go head-to-head with Portugal legend “Chris Ronald?”
No matter how much you love or hate EA, specifically their EA Sports lineup, they hold the licensing rights. Sure, you can buy rival game offerings within the genre, and they may even play better. But they won’t have league licensing rights, player rights and other key sponsorships and endorsements. In other words, it won’t look authentic, and ultimately, that’s what you need to fulfill your fantasy.
As an investor, EA stock is a no-brainer. The underlining company has gone from merely replicating professional sports to integrating themselves into pro leagues. Consider that every year, computer simulations utilize EA’s Madden series to predict the Super Bowl winner.
EA stock is simply too big to fail.
Best Video Game Stocks to Buy: Sony
Back when video games were largely played for fun, Nintendo Co. (OTCMKTS:NTDOY) dominated the landscape. But with the advent of high-definition TVs, consoles evolved from being single-purpose devices to outright mega-computers. Today, Sony Corp (NYSE:SNE) is the new gaming king, thanks to its mercurial PlayStation consoles.
Naturally, Microsoft Corporation’s (NASDAQ:MSFT) Xbox fanboys will have something to say about that. But based on overall sales figures, and Sony’s PlayStation 4 beating the Xbox One to market, my statement is justified. But for full disclosure, I am biased. I spent most of my career working for Sony, I own a PlayStation 4 and I’m long SNE stock.
With those disclosures aside, I still think you should consider SNE one of the best video game stocks to buy. Back when I was a Sony senior analyst, the company wasn’t doing too well. However, we all knew that the PlayStation was our saving grace. Thus, corporate invested deeply into our gaming division because we absolutely had to win the “console wars.”
That ferocity — and perhaps desperation — paid off with the PlayStation 4’s massive success. Furthermore, as InvestorPlace contributor Bret Kenwell notes, Sony’s virtual reality platform is making big waves. Again, SNE is beating out Microsoft.
Most importantly, Sony is finally righting its ship after years of disappointment. Buy SNE stock for the video games, or buy it for the broader recovery: either way, I don’t think you can go wrong!
Best Video Game Stocks to Buy: Glu Mobile
Most stories on video game stocks focus on consoles or PC platforms, and for good reason. Modern games utilize photorealistic graphics and that requires serious computing power. Companies like Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD) spend millions developing the processors that today’s consoles demand.
Despite this gargantuan presence, you definitely shouldn’t ignore mobile gaming and smaller outfits like Glu Mobile Inc. (NASDAQ:GLUU). We spend an inordinate amount of time on our smartphones, and much of it for unproductive pursuits. According to Statista.com, global revenues from mobile games generated $40.6 billion last year. Better yet, the outlook is exceptionally positive, spelling good things for GLUU stock.
Moreover, GLUU leverages entertaining and addictive games, such as MLB Tap Sports Baseball and Racing Rivals. The company’s biggest coup d’état, though, is securing lucrative third-party licenses. GLUU owns Restaurant Dash with Gordan Ramsay and Kim Kardashian: Hollywood. They also have Taylor Swift: The Swift Life app, which might as well be a license to print money.
At a little under $4, GLUU stock is certainly the cheapest among the featured video game stocks. However, this also makes GLUU a potential takeover target. If so, there’s a good chance shares will be bought at a nice premium, given the company’s standout assets.
As of this writing, Josh Enomoto is long bitcoin and SNE.