If I were making my living as a professional athlete, I wouldn’t let myself be sidelined by an injury from playing a video game. Football was my sport. As a wide receiver, I had defensive backs looking for every opportunity to flatten me, so I didn’t need a video game to also injure me.
If you’re wondering what the heck I’m talking about, let me tell you.
Earlier this year, Boston Red Sox pitcher David Price was diagnosed with carpal tunnel syndrome after he began experiencing numbness in his fingers. It got bad enough that he missed a start in May, and the rumors quickly surfaced that the time he spent playing the wildly popular video game Fortnite may have contributed to the problem. The connection has never been made, but he did admit that he played the game up to three hours a day, sometimes at the ballpark and sometimes with teammates.
And he’s not the only one doing that. In fact, three hours a day is probably a half day’s worth of gaming – or even less – for a growing number of people, making video games and eSports among the most powerful trends unfolding right now that give investors an opportunity to make a lot of money.
We saw more evidence of that at the recently concluded E3 2018 expo, which is one of the world’s biggest events for computer and video games and all of the related products and accessories. The Entertainment Software Association, which puts on the event, estimates that 60% of Americans play video games every day – note that we’re just talking about Americans and not other parts of the world where gaming is also extremely popular, like China.
Nearly 70,000 people attended the sold-out expo, which was 35% more than last year as it was opened up to gaming fans instead of being limited to industry insiders like game developers and console makers.
One estimate I saw from an analyst at Baird projects that gaming will become the largest segment of the media and entertainment industry all over the world in just two years.
Revenue is expected to reach $145 billion. That’s a lot of money, so you can see why investors need to be paying attention.
The number of people playing games is growing – on consoles, computers and mobile devices – and the technology behind the games is improving. I’ll talk in an upcoming article about my recent experience with a virtual reality headset that was mind-blowing.
Two Gaming Stocks Set to Rise
One of the big announcements at E3 was from Nintendo (NTDOY), which said that the global megahit Fortnite is now available on its Switch console. It is also coming to the Android operating system soon after already being available on computers, Sony PlayStation 4, Xbox One and Apple’s iOS.
I like Nintendo, which may surprise you given its recent slide. There hasn’t been any negative news to trigger the selling, so it looks as if either a big fund has been dumping some shares or investors feel that the future is already priced into the current share price. Some analysts are pointing to a lack of big news recently. The company responded by stating that they have always kept big announcements close to the vest and that will not change.
This is where experience comes in handy. In my 20 years of investing for a living, I have come across top-rated stocks that fall for a period of time for no real reason. Most of the time, an unwarranted sell-off is a great buying opportunity, and that’s what I see here in a company that is a leader in a high-growth investment theme. A little further down the road, some of these investors are going to look back and wonder why they headed for the exits.
Fortnite is by far the most popular game in the world, and it was developed by a company – Epic Games – that is connected to another stock I really like: Tencent Holdings (TCEHY). Tencent owns 40% of Epic Games, but more than that it is China’s largest internet company and one of the world’s largest e-gaming companies. It also benefits from social media, eSports, e-commerce and the booming Asian middle class.
This stock is a great long-term holding. In less than a year, we’re up 42% in this stock in my Investment Opportunities service. Our goal is to use our unique research process, which combines fundamental and technical analysis with boots-on-the ground and face-to-face intelligence gathering, to make massive gains in big winners leading the way in exploding mega-trends. We want to let those profits continue to build – double, triple and more – over time, and TCEHY definitely fits the bill.
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