A shelter-in-place mandate doesn’t have to be a drag. The gaming market can likely help with that. And with Wall Street open for business, it also means there are thematic trends in listed video game stocks to ride to big-time profits. Let me explain.
Stocks go up and stocks go down. And of late, the stock market has been moving strongly higher. The price action continues to reinforce the broader averages’ new bull market out of a short-lived, but whopping bearish correction. For its part the S&P 500 is up a stunning 33% since its March bottom while retracing 62% of its sell-off. And it’s not only large-capitalization stocks that have answered this bullish call to arms. Small- and mid-cap indices are also marching similarly higher.
Suffice it to say, it might appear investors could play a game of darts with publicly traded tickers and come up a winner without too much effort. But in today’s socially distanced normal — and in a coming post-novel-coronavirus environment that will continue to stress those best practices — video game stocks are sure-fire winners over the long haul.
Despite movies and television series being consumed like never before on streaming services from Netflix (NASDAQ:NFLX) to Apple’s (NASDAQ:AAPL) Apple+ or one of Walt Disney’s (NYSE:DIS) popular platforms, the market for video games is even bigger.
And it’s going to continue to grow. It’s projected to top $300 billion by 2025 according to GlobalData, as technology and more inclusive and diverse offerings broaden this exciting and already large market’s reach.
Now let’s take a sneak peek at three video game stocks whose price charts are hinting at a big-time and profitable heist for bulls on the backs of those felonious bears.
Video Game Stocks to Buy: Electronic Arts (EA)
Source: Charts by TradingView
Electronic Arts is the first of our three video game stocks to buy. EA is an industry giant sporting a market cap of around $33 billion. The company’s success is due in part to widely popular and profitable franchises such as The Sims and Star Wars, as well as lucrative sport licensing deals with FIFA and the NFL. Electronic Arts is also a powerhouse in the growing world of esports.
Technically, bears haven’t been defeated just yet. But the big picture of EA stock’s price chart suggests a victory for bullish investors is near. The illustrated monthly view shows a doji decision candle from March has been confirmed. April’s higher high pattern reinforces a bullish channel that’s developed out of this video stock’s larger correction which ended in late 2018.
To have the deck stacked in investors’ favor, I’d recommend buying EA stock above Fibonacci and channel resistance. I’d like to see shares rally through $122 alongside confirmation of a bullish stochastics crossover before pulling the trigger. For options traders, the Sep $130/$140 bull call spread in lieu of buying this video game stock looks favorable.
Take-Two Interactive (TTWO)
Source: Charts by TradingView
The next name on our list of video game stocks to buy is Take-Two Interactive. Take-Two and its publishing subsidiaries are another force to be reckoned with inside the industry. Among the parent company’s crown jewels are the Grand Theft Auto, Red Dead and Borderlands franchises.
On the price chart TTWO stock is also looking every bit the long-term winner. The monthly view shows a corrective, high-level inverse head and shoulders continuation pattern is developing. A breakout move above $130 and neckline resistance should go a long ways towards improving this video game stock’s market cap of $13 billion.
I’d conservatively place a price target of $180-$200 on shares. Please wait for confirmation from Take Two stock. But before you hit the buy button, also be sure to consider the Jan $150/$170 bull call spread to gain favorable leverage with limited and reduced risk exposure.
Zynga (ZNGA)
Source: Charts by TradingView
The final stock on our list of video game stocks to buy is Zynga. Zynga is another publisher. The big difference here is the company’s successful pivot from browser-based games to the growing mobile market. Nearly written off by Wall Street a few years ago, Zynga’s transition has allowed it to grow sales by more than 60% year-over-year, turn a profit and enjoy a healthy operating cash flow.
At roughly $7.25 billion in market cap, this video game stock is the smallest of the lot. But Zynga has also struck a new deal with Amazon (NASDAQ:AMZN) to showcase its games to the company’s Prime subscribers. According to Zynga’s publishing brass, it could be the start of a much larger collaboration.
The monthly price chart also supports the premise that Zynga is going to get even bigger. Technically, ZNGA has just confirmed a high-level doji pattern after months of toiling with former resistance around its prior 5-year high.
Currently positioned near the doji high and backed up by a supportive stochastics set up, Zynga is ready for purchase today. Alternatively, the Dec $9 call priced for 70 cents and less than 10% stock risk is an open-ended way to ride the trend with sufficient time on the calendar to allow for big-time profits to emerge.
Investment accounts under Christopher Tyler’s management does not own any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
