With Black Friday just a few days away, it’s a time to reflect on true American values: beating the living crap out of our fellow man so that we can save a few bucks on digital trinkets. In all seriousness, though, the kickoff to the holiday shopping season is big business. To take advantage of this time, you may want to load up your stockings with video game stocks to buy.
While this season represents an opportunity for retailers to move into the black (hence the name), Black Friday is especially advantageous for video game stocks. One of the reasons is technical: several game developers experienced severe volatility late last year. And many of them have yet to recover, providing discounted entry points for prospective buyers.
A second reason is timing. Leading game device developers are set to launch their next-generation consoles in 2020. Naturally, such a move would inspire other competitors to take note, releasing their own competing devices. And this almost ensures that we’ll see deep discounts and bundled deals for Black Friday. Thus, 2019 could turn out to be a huge cash cow for video game stocks.
Finally, this segment isn’t just limited to nerds and computer geeks. Surprising to many, video games have become a cultural phenomenon. Today, it’s weird if you don’t play.
With these factors in mind, here are eight video game stocks to buy:
When it comes to consoles, nobody can touch Sony (NYSE:SNE) and its iconic PlayStation. Late last month, Sony announced that its current-gen PS4 has sold nearly 103 million units worldwide. With exclusive licensing and a massive content empire, the future looks bright for SNE stock.
In addition, with the PS5 scheduled for release in 2020, Sony has a vested interest in churning out crazy deals for this year’s Black Friday. At multiple retailers across the U.S., you can buy the PS4 Pro edition for $299.99 as a doorbuster deal. Ordinarily, you’d be paying $400, so this presents a significant savings opportunity, bolstering SNE stock this November.
However, keep in mind that Sony is much more than a member of video game stocks. Its multi-varied business units, including its digital optics and entertainment division, have clearly resonated with investors. So far this year, SNE stock is up over 28%.
Although no one likes coming in second place, with video game stocks, it’s not such a bad gig. Just take a look at Microsoft (NASDAQ:MSFT). While video games are not the only reason why MSFT stock has skyrocketed under Satya Nadella’s leadership, they certainly helped.
Since its debut six years ago, the current-gen Xbox One has sold well more than 41 million units. This easily places the Xbox within the top 20 most-popular consoles in history. And while this figure won’t compete with Sony, like its rival, MSFT stock is a multi-dimensional investment. Whether you want it as reliable exposure to video game stocks or as a software powerhouse, MSFT does it all.
Since Microsoft is also prepping for its next-gen console, the doorbusters this Black Friday are phenomenal. The latest edition Xbox One X will be sold at $150 off its regular retail price. Thus, keep a close eye on MSFT stock this holiday season.
Among video game stocks, Nintendo (OTCMKTS:NTDOY) doesn’t get as much attention as the top two players. That goes for NTDOY shares in the investment markets as well. However, I think folks are missing out. On a year-to-date basis, NTDOY stock is up a whopping 47%.
Its Black Friday promotions should help keep that momentum alive. One of the main highlights for NTDOY stock is the underlying company’s hybrid console Nintendo Switch. A handheld gaming device for those on the go, the Switch transitions to an in-home console seamlessly. The Switch doesn’t take itself too seriously, which appeals to many gamers.
Although the doorbusters this year aren’t as jaw-dropping as Sony’s or Microsoft’s offerings, they’re still compelling. Nintendo is focused on bundling: for instance, you can get a Switch with the ever-popular “Minecraft” game for $298 at Walmart (NYSE:WMT). Compare that to the regular retail price of $329.
Activision Blizzard (ATVI)
Of course, no discussion about video game stocks is complete without mentioning Activision Blizzard (NASDAQ:ATVI). One of the originators of the first-person shooter genre, Activision’s Call of Duty franchise is permanently embedded in the gaming industry’s fabric. Moreover, with its latest edition, “Call of Duty: Modern Warfare,” the company has reinvigorated its flagship series. This couldn’t come at a better time for ATVI stock.
As I argued recently, a few years back, Activision lost the plot with its Call of Duty games. Rather than emphasizing its gritty – and sometimes controversial – narrative-driven campaign modes, the company shifted toward futuristic scenarios. However, when they returned to its World War II-themed roots, Activision achieved record-breaking sales. We’re seeing similar engagement with “Modern Warfare,” lifting my confidence toward ATVI stock.
As you know, shares are struggling to gain traction from last year’s steep losses. This year’s doorbuster sales will help. With Modern Warfare’s “C.O.D.E. Edition” available for $38 (retail is $60), ATVI stock is well-positioned to benefit.
Electronic Arts (EA)
Another key player among video game stocks to buy, Electronic Arts (NASDAQ:EA) is also struggling to gain traction this year. In the latter half of 2018, EA stock veritably crumbled. On a YTD basis, shares are now up nearly 27%. Still, that doesn’t quite remove the bad taste from last year. However, Black Friday deals should help significantly.
Among the driving forces of EA stock is the game developer’s lucrative licensing deals. As a prime example, Electronic Arts released “Star Wars Jedi: Fallen Order” this month. Naturally, this coincides with Disney’s (NYSE:DIS) upcoming Star Wars film, which is going to break all kinds of cinematic records.
Furthermore, EA Sports is a huge revenue generator due to its popular Madden and FIFA series. Sure, the gameplay may get repetitive for some players, but they keep on buying: basically, EA has a monopoly on authentic sports licenses.
Plus, the company has big price slashes for Black Friday. Thus, you don’t want to give up on EA stock prematurely.
Take-Two Interactive Software (TTWO)
Similar to top development-based video game stocks, Take-Two Interactive Software (NASDAQ:TTWO) dropped substantially in the final calendar quarter of 2018. With gamers gravitating en masse toward cartoonish games like “Fortnite,” TTWO stock lost some relevance. In addition, gamers’ increased adoption of the mobile platform didn’t help matters.
However, with the record-breaking popularity of Activision’s “Modern Warfare,” sentiment may be returning favorably for TTWO stock. After all, the company has developed a reputation for gritty games, such as its controversial Grand Theft Auto series. Moreover, its Red Dead Redemption 2 has earned Take-Two new fans.
But it’s not just blood and guts that underlines TTWO stock. Instead, Take-Two has invested in lucrative licensing deals to develop popular NBA and World Wrestling Entertainment (NYSE:WWE) games.
Finally, the game developer should experience a nice Black Friday boost. A key standout is “Red,” which will be sold at $29.99.
While there’s no feeling quite like popping a cap in someone’s hind end for a PlayStation, understandably, it’s not everyone’s cup of tea. While Black Friday is an American tradition, many consumers would rather do their shopping online. Besides, Cyber Monday is likewise a huge event for e-commerce giant Amazon (NASDAQ:AMZN) and AMZN stock.
Rarely have I participated in Black Friday, and I’m certainly not going to wait outside in the cold for a video game. For such purposes, I have Amazon.com. And as you’d expect, the king of disrupters has some big deals planned. Thus, while it’s not a video game company – its streaming service notwithstanding – Amazon plays a massive role in the distribution. Therefore, I’ve included AMZN stock on this list.
Furthermore, a compelling component of the bull case is the equity’s lack of momentum. Since early August of this year, AMZN stock has been subdued. However, I have a hard time believing this will continue much longer.
Due to the emergence of video game downloads and subscription services, demand for physical gaming discs subsided. With that, brick-and-mortar retailers that specialized in those physical games, like GameStop (NYSE:GME), suffered badly. Yet a few months back, Michael Burry from “The Big Short” fame forwarded the bullish argument for GME stock.
You can read my take on his arguments and see if you agree or not. But specific to Black Friday, I believe speculative bulls have reason for confidence in GME stock.
When it comes to Christmas gifts, the physical platform lends itself well to the season’s festivities. After all, there’s no way to gift wrap a digital subscription. Moreover, digital gifts are tacky, sending the message that you didn’t think about them until the last minute.
Finally, GameStop offers a way for people to buy used games for very cheap. Obviously, you can’t download second-hand games. For gamers on a budget, GameStop offers a surprisingly valuable service, thereby bolstering GME stock.
As of this writing, Josh Enomoto is long SNE stock.