10 Gaming Stocks That Will Power Through the New Normal


gaming stocks - 10 Gaming Stocks That Will Power Through the New Normal

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During the start of the novel coronavirus pandemic, the case for video gaming stocks to buy was very straightforward. With millions of people in both the U.S. and abroad forced to quarantine at one point or another, entertainment options during this unprecedented time were limited. Not surprisingly, several countries reported a spike in gaming.

But from around early May to mid-June, the narrative in the U.S. changed significantly. As the acceleration in daily new infections slowed, individual states gradually started reopening their economies. Additionally, surprisingly positive jobs reports and consumer data bolstered reopening initiatives. While this dynamic didn’t kill video gaming stocks to buy, competing platforms appeared poised to blunt their momentum.

However, if your target industry is on the right side of the coronavirus, the Covid-19 pandemic is a gift that keeps on giving. Because now, rising infection rates and hospitalizations have caused even the skeptical President Donald Trump to change his tune. Masks are important to wear, even for young people, if you can’t maintain social distancing. Thus, the specter of prolonged shutdowns again bodes well for video gaming stocks to buy.

Not only that, the culture that underlines gaming stocks has found tremendous mainstream acceptance. As a result, sales have been booming for years and not just in the U.S. Indeed, video games are now an international phenomenon. And that’s why gaming companies have become incredibly diverse, as you can see from the list of names which we’ll discuss below:

  • Electronic Arts (NASDAQ:EA)
  • Activision Blizzard (NASDAQ:ATVI)
  • Sony (NYSE:SNE)
  • Microsoft (NASDAQ:MSFT)
  • Amazon (NASDAQ:AMZN)
  • Nintendo (OTCMKTS:NTDOY)
  • Glu Mobile (NASDAQ:GLUU)
  • Advanced Micro Devices (NASDAQ:AMD)
  • GameStop (NYSE:GME)

Finally, keep in mind that we’re heading toward the final weeks of summer. With colder weather approaching, it’s possible that the pandemic could worsen. Also, people could panic, even if they catch the common cold. This could create chaos, further supporting these video gaming stocks to buy.

Gaming Stocks to Buy: Electronic Arts (EA)

Electronic Arts (EA) logo on a black background.

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Consistently, Electronics Arts’ professional athletic brand EA Sports has anchored the company as one of the top video gaming stocks to buy. But even with the return of sports, my enthusiasm for EA stock hasn’t changed. That’s due to a little something called an exclusive licensing agreement with the NFL.

Of course, EA Sports has other professional sports licenses, most notably its FIFA franchise. However, the NFL is really the engine behind the game developer’s success. And that’s always been the case. But with the coronavirus pandemic, EA stock has a great chance of skyrocketing later this year.

For one thing, sports fans have been incredibly deprived of their passion. So much so that in April, the NFL draft resulted in record-breaking viewership stats. Even more intriguing, the draft was broadcast via a teleconferencing format. In other words, hardly riveting stuff in any other context.

But this just proves how much demand exists for anything NFL-related. With Electronic Arts holding the exclusive gaming simulation license of the NFL, we should see EA stock fly.

Bear in mind too that a cancellation of the NFL season isn’t out of the question because of its high-contact nature. If so, that’s bad news for the league. However, it might give a boost to Electronic Arts by facilitating an alternative.

Activision Blizzard (ATVI)

Activision Blizzard (ATVI) text on a black background.

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Like rival Electronic Arts, Activision Blizzard has established a powerful brand name thanks to its compelling franchises. However, it’s best known for its Call of Duty series, which has popularized the first-person shooter (FPS) style of games. The FPS format gave users an immersive experience. Not surprisingly ATVI stock has enjoyed long-term success.

Unfortunately, it has encountered some bumpy roads in recent years. Most notably, competition from free-to-play games like Fortnite — which also offered the now ubiquitous battle royale mode — has taken the thunder out of Activision. Activision also didn’t do itself any favors by making the Call of Duty series more fantastical than realistic.

But management decided to listen to their consumers, with excellent results. Specifically, the latest Call of Duty title is gritty, violent and relevant, with plot lines taken right out of the news. It’s this pivot to making products that gamers care about that should help lift ATVI stock.

Additionally, the company has strong potential with its burgeoning esports business. Therefore, make sure to consider Activision among your gaming stocks to buy.

Gaming Stocks to Buy: Sony (SNE)

A Sony (SNE) sign hangs at the Sony Interactive Entertainment offices in Silicon Valley.

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If there’s one company that could use a blast from the past, it’s Sony. A remarkable consumer technology that epitomized Japan Inc., Sony made many blunders over the past two decades. Not surprisingly, SNE stock didn’t really inspire most investors until a few years ago.

But the one business line that kept the lights on at this company is PlayStation. Every new-generation console release has been met with rabid enthusiasm. Despite some worrying economic metrics, I expect the same fanfare when Sony debuts its much-anticipated PlayStation 5 later this year.

Although my opinion doesn’t matter much, I think I speak for most gamers in that the PS5 is gorgeous. Architecturally, it’s a dramatic shift from the familiar console framework that we’ve been accustomed to. In addition, many popular franchises, including the flagship racing game Gran Turismo 7, will be available at or near the time of the console’s release.

Plus, SNE stock isn’t just levered to the gaming industry. For instance, it’s a leading camera optics developer for smartphones. So, even if the gaming stocks angle doesn’t quite pan out, Sony is still surprisingly relevant.

As well, keep in mind that the average Japanese consumer saves like crazy. The American counterpart, though, spends like crazy. This could turn out be a significant differentiator in terms of sustainability down the line.

Microsoft (MSFT)

Image of corporate building with Microsoft (MSFT) logo above the entrance.

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If you hang around console gaming forums, invariably, you’ll run into the PlayStation versus Microsoft Xbox debate. Frankly, I don’t understand what all the fuss is about. Clearly, the PlayStation is better in almost every category.

However, I do know quite a few folks that are ardent Xbox fanatics. And let’s give credit where it’s due: The upcoming Xbox Series X should give the PS5 a run for its money. Both are scheduled for release for the holiday season of this year. In addition, Microsoft claims that its upcoming console is the “fastest, most powerful games console ever.”

We shall see. But it’s amazing hype for MSFT stock, I’ll give it that.

Another factor bolstering Microsoft is that it’s not just competing with other gaming stocks to buy. As you know, the software giant has successfully plied its trade in several pertinent sectors, most significantly cloud computing.

Further, Microsoft is an irreplaceable software-as-a-service platform. In fact, without Microsoft’s suite of business applications, I wouldn’t be able to make a living. So, that’s another good reason to buy MSFT stock.

Gaming Stocks to Buy: Alphabet (GOOG, GOOGL)

Google (GOOG, GOOGL) headquarters in Mountain View, California.

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If I’m being perfectly honest, I’m not sure how Alphabet will stack up against other gaming stocks to buy. On one hand, Alphabet’s video game streaming platform, Stadia, represents the next logical evolution in the industry. With everyone streaming — especially with the coronavirus-fueled lockdowns — Stadia, and thereby GOOGL stock makes sense.

However, there’s another component to consider and that is the viability of this technology. Streaming pre-recorded content is one thing. But what happens when you’re playing processor-intensive titles over the cloud? Will there be hiccups associated with possible server overload? To be fair, Alphabet states that its data centers are designed to handle peak traffic proficiently. If so, that’s a plus for GOOGL stock. But it’s also a big if.

As a sole competitor against other gaming stocks, GOOGL would be a tough sell. However, what I love about Alphabet is that it essentially owns the internet. You’re not going anywhere if you don’t have a strong Google ranking. In addition, its advertising reach is unparalleled.

Finally, let’s mention Alphabet’s YouTube business. The first round of quarantines made this video uploading service attractive. A possibly sustained second round will make it indispensable given that it might be associated with a weakened consumer economy.

Thus, as a combined entity, I believe GOOGL stock is very attractive.

Amazon (AMZN)

Amazon (AMZN) logistics center in Szczecin, Poland.

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True to form, e-commerce and tech giant Amazon has been making noise in the video game arena. Since it loves disrupting anything that carries any weight with the public, it was only a matter of time before we consider AMZN among the potential gaming stocks to buy.

First, Amazon.com is a great place to buy games and accessories, especially with the coronavirus shuttering everything. Personally, I’ve tried to limit my physical shopping as much as possible. This included signing up for Amazon Prime because at this rate, it would save me money. Yes, this is just my own anecdote but I’m sure it has been repeated multiple times across the country.

Second, AMZN stock is increasingly becoming a direct play toward the gaming industry. Obviously, you have Amazon’s Twitch streaming service. Frankly, I’m not entirely sure how the economics of Twitch work. But if you’re really entertaining at playing video games, you can make a great living.

And don’t laugh this off because for whatever reason, people love watching other people play video games. With the coronavirus bringing real athletes and esports together in an unprecedented manner, I believe Twitch can cement itself in the gaming narrative.

Additionally, Amazon has invested millions of dollars into creating its own games, including a science-fiction shooter called Crucible. I would be a little bit skeptical about Amazon if it were a standalone competitor to other gaming stocks. But as the all-encompassing disruptive giant that it is, there’s no stopping AMZN stock.

Gaming Stocks to Buy: Nintendo (NTDOY)

A yellow Switch Lite from Nintendo (NTDOY) sits in front of a bright pink background.

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Often overlooked among gaming stocks to buy, Nintendo is nevertheless a significant player. Its classic Nintendo Entertainment System truly pioneered the explosive gaming scene that we see today. Such is the draw of this classic console that millennials are willing to pay big bucks to rekindle some of that childhood magic.

Of course, Nintendo is all too happy to oblige. While the “serious” console manufacturers are all about pushing the technological envelope, Nintendo has found tremendous success looking backwards. Taking an unusual step, the company re-released its NES console to much fanfare. However, it can get away with it as NTDOY stock is not just an investment in gaming, but also in popular culture.

That’s not to say that Nintendo is a regressive company. Actually, it could turn out be surprisingly relevant. Right now, millennials represent the largest generation in the U.S. labor force, according to the Pew Research Center. Naturally, this means many older millennials are starting families, translating to shifted priorities.

These parents probably aren’t looking to get their kids started on consoles that could potentially play realistically violent games. Instead, Nintendo still specializes in wholesome family fun, which could see NTDOY stock receive a demographic boost.

Glu Mobile (GLUU)

The logo for the Kim Kardashian game from Glu Mobile (GLUU) is displayed on a smartphone screen.

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One of the most powerful developments in the gaming industry is the expansion in platforms. When the first cell phones came out, users were very limited in their entertainment options. But as smartphones became the golden standard in mobile communications, gamers could find that they could take their craft anywhere. As such, Glu Mobile came to prominence with their smartphone and tablet-friendly titles.

The lockdowns also gave the company free organic marketing, which eventually served to lift GLUU stock. With millions essentially under quarantine, they had nothing but time on their hands. Moreover, not everyone wants to spend hundreds of dollars on a dedicated console. Mobile games provided quick entertainment for those who were looking to kill the time.

Interestingly, several western European countries saw a dramatic lift in gaming app downloads after coronavirus cases first started spreading in the region. Given the rise in GLUU stock in April and May, we likely experienced a similar dynamic at home.

To provide fair warning, GLUU is more volatile than other gaming stocks. However, we may not just suffer a second wave of the coronavirus.

Instead, it seems like we’re headed toward a third wave as colder weather, social unrest and a potential economic crisis converge. Put another way, it’s best to stay home and that may inspire higher rates of mobile gaming.

Gaming Stocks to Buy: Advanced Micro Devices (AMD)

A Ryzen chip from Advanced Micro Devices (AMD).

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When I last wrote about gaming stocks to buy in the second half of June, I openly worried about U.S.-China relations. Because Trump had few angles to play, I felt that he would pound China relentlessly. As the consulate wars demonstrate, I was right to be concerned.

On the surface, this doesn’t help the case for AMD stock. As a Forbes’ article pointed out late last year, “China is the largest market for AMD products.” Therefore, it’s possible that Advanced Micro could suffer poor sales in the country. And that’s not a dig against the company. As I said, the entire semiconductor market faces risk.

However, rival Intel (NASDAQ:INTC) made moves when the company admitted that its 7-nanometer chips had defects, necessitating a contingency plan. That involves moving to third-party foundries. Obviously, the news cratered INTC but dramatically lifted AMD stock.

Additionally, as a play on gaming stocks to buy, AMD is quite compelling. First, the upcoming PS5 utilizes AMD processors. Should demand beat expectations — and I think it will — that should also boost AMD stock. Second, the company’s graphics processors have tremendous appeal among hardcore gamers.

Finally, the cryptocurrency market may make a comeback, this time as a digital safe haven for millennial investors. Based on how AMD’s crypto-mining business took off in 2017 when blockchain assets launched into orbit, we could see a repeat performance.

GameStop (GME)

Retailers walk past a GameStop (GME) store in New York City, New York.

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Easily the most speculative idea among gaming stocks to buy, GameStop at first glance seems a ridiculous bet. For one thing, game downloads have become incredibly popular, especially in the era of quarantines. Another point is that Amazon can provide the used-game experience with the convenience of ultra-quick delivery.

Finally, video game streaming can take off. So, why would anyone consider GME stock?

In a strange way, the coronavirus that makes GameStop’s competitors attractive also makes GameStop an interesting idea. Although social distancing is a concern among many Americans, so is making every dollar stretch. With a plethora of used games, GameStop can offer cheap entertainment.

Better yet, buying physical discs is a one-and-done affair. While video game streaming is an innovative concept, I doubt many consumers are willing to fork over monthly subscription fees. With GameStop, you only buy what you want, typically at a discount.

However, the case for GME stock isn’t without risks. Mainly, shares are all over the map. Also, rising infection rates means that non-essential businesses dependent on a physical footprint may incur waves of disruptions. But if you have the stomach for choppiness, this could turn out to be a surprising pick.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he is long SNE and GME.

Article printed from InvestorPlace Media, https://investorplace.com/2020/07/10-gaming-stocks-that-will-power-through-the-new-normal/.

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