With a new generation of gaming consoles set for December release, gaming stocks are some of the greatest investments you can make right now.
In fact, when Microsoft (NASDAQ:MSFT) and Sony (NYSE:SNE) release new consoles, I expect to see higher highs in top video game stocks. After all, if you’re going to pay up to $500 to play games, you’d need new games to go along with it.
Better still, video game stocks have a history of outperforming markets with new consoles. KeyBanc analyst Tyler Parker told Barron’s that video game stocks rose 40% to 50% in 2014, the year after Sony and Microsoft released the PlayStation 4 and the XBox One. That easily outperformed the S&P 500 and the Nasdaq 100.
With that in mind, here are three of the top video game stocks to consider right now.
Gaming Stocks to Watch: Activision Blizzard (ATVI)
The first time I weighed in on Activision Blizzard, I said, “Activision Blizzard stock has plenty of catalysts, including those new consoles. I’d like to see the stock’s bearish gap refill to $65 in the near term. In the longer term, I think ATVI can test its September 2018 high of $84.”
That was on Nov. 15, 2019, as the ATVI stock traded at $52.36. Now it finally hit my price target of $84 and could easily run to $100 a share in the near term, making it one of the best gaming stocks to buy now.
All as we near the release of the new gaming consoles, and new ATVI games, including Overwatch 2 and Diablo 4. Parker also raised his price target to $83 a share from $80 because of upcoming game titles like Crash Bandicoot 4: It’s About Time.
Electronic Arts (EA)
The last time I weighed in on Electronic Arts, I called it a “no-brainer ahead of new console releases.” That was on Jan. 14 as EA stock traded at $109.66. Now it’s up to $140 and could run to $170 as we near the new console releases.
It’s not just anticipation of new consoles that’s driven the EA stock higher. Stay at home orders did that, too. In fact, because of that, the company just posted earnings of $1.25 a share, which came in well above expectations for EPS of $1.02. Net revenue jumped to $1.46 billion, which topped expectations for $1.05 billion.
“For the current quarter, EA expects revenue of $1.125 billion, and earnings of 21 cents a share. For the full fiscal year, which ends March 31, 2021, the company expects revenue of about $5.63 billion, and earnings about $2.97,” as reported by Barron’s contributor Connor Smith.
Take-Two Interactive (TTWO)
Since bottoming out at $100 in March 2020, Take-Two Interactive has exploded to a high of $168.15. Not only is TTWO running on anticipation of solid quarterly numbers, post-lockdowns, it’s also running ahead of the new consoles, which could help send the stock to $200 in the near term.
Sending TTWO even higher is news its publishing label 2K partnered with the NFL.
“The partnership will grant 2K the right to feature the names, numbers, images and likenesses for over 2,000 current NFL players. OneTeam, the NFLPA’s group licensing representative, facilitated the deal,” as noted by a recent 2K press release.
In addition, Take-Two Interactive just announced it would charge $70 for its NBA 2K21 games for the new consoles. “Bernstein analyst Todd Juenger also sees the increase as net positive for the industry, writing in a Thursday note to clients that a higher price means fatter margins and better unit economics. Juenger raised his target price on Take-Two to $189 from $158,” as noted by Barron’s contributor Max A. Cherney.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.