SPECIAL REPORT The Top 7 Stocks for 2024

The 3 Most Undervalued Gaming Stocks to Buy Now: August 2023


  • The video game industry has many years of double-digit compounded annual growth on the way. These undervalued gaming stocks can help investors realize long-term returns.
  • Nintendo (NTDOY): An iconic company continues to deliver for investors.
  • Microsoft (MSFT): The tech conglomerate gives investors exposure to various industries, including video games.
  • Sony (SONY): Double-digit revenue growth and a reasonable valuation can help this stock generate returns for investors.
gaming stocks - The 3 Most Undervalued Gaming Stocks to Buy Now: August 2023

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The video game industry is booming and has a good runway. Iconic brands, easy access to popular titles, and other factors have contributed to video games becoming a core component of many people’s lives. The industry is expected to achieve a 12.9% compounded annual growth rate from now until 2030. This has led to the rise of the best gaming stocks to buy.

The global video game industry had a $195 billion valuation in 2021. The type of buzz video games can generate presents compelling opportunities for investors. Buying the right video game stocks can lead to gains, but you don’t want to get stuck with an overvalued stock.

Investors who want to level up their portfolios may want to consider these undervalued gaming stocks. 

Nintendo (NTDOY)

Source: Nintendo

It’s hard to talk about video game companies without mentioning Nintendo (OTCMKTS:NTDOY). The company has produced iconic brands, such as Super Mario Bros and Pokemon that continue to sell millions of copies each year. 

The Nintendo Switch has been around for six years and recently crossed 130 million sales. That only includes the console. The new game Legends of Zelda: Tears of the Kingdom has sold over 18.5 million copies, and gamers have been purchasing more Mario Bros games since the movie came out. Releasing movies of other iconic brands can help bring additional support to beloved franchises. This makes it one of those gaming stocks to keep on your radar.

Shares currently trade at a 14 P/E ratio. The company reported 50% year-over-year revenue growth and 52.1% year-over-year net income growth in the three months ended June 30, 2023.  Growth in the gaming industry will help Nintendo reach more gamers and increase its earnings. Shares are up by 33% over the past five years.

Microsoft (MSFT)

The Microsoft logo outside a building representing MSFT stock.
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Microsoft (NASDAQ:MSFT) is a tech conglomerate that has maintained a strong exposure to the gaming industry through its Xbox console and games. However, the company’s acquisition of Activision can get through the final roadblocks soon and help the corporation gain a larger share of the video game industry.

Microsoft shares have almost tripled over the past five years and have a 33 P/E ratio. The company’s net income jumped by 20% year-over-year in the second quarter, and the company has healthy profit margins that exceed 30%. 

Microsoft isn’t a pure play in the gaming industry. However, its presence in the gaming industry can lead the stock higher. Investors should also monitor other parts of Microsoft’s business, with a large focus on Microsoft Azure, the company’s cloud computing technology.

Sony (SONY)

Sony logo on the side of a building at its offices in Silicon Valley.
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Sony (NYSE:SONY) shares are up by 11% year-to-date and have gained 56% over the past five years. The company has been producing Playstation consoles and games since 1994. The most recent model, the PlayStation 5, has sold 38 million units from 2020 to the start of 2023. 

Shares currently trade at a reasonable 17 forward P/E ratio, and the company has achieved solid double-digit revenue growth over the past several quarters. The company reported an additional 1.6 trillion Yen in sales in Fiscal Year 2023 compared to Fiscal Year 2022. That represents a 16.3% year-over-year improvement.

Sony is also considering spinning off its financial division as a separate company. The move would allow Sony to focus more of its efforts on gaming and chips. This spinoff can reward long-term investors and help Sony increase its market share in the video game industry.

On this date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/08/the-3-most-undervalued-gaming-stocks-to-buy-now-august-2023/.

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