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Stockchase Discover
Corsair Gaming
CRSR-Q
RISKY
Dec 01, 2020
Allan Tong’s Discover Picks Corsair stock had a so-so debut in late-September at an initial stock price of $15, it has since topped $51. Beware: like many tech IPO's this fall, Corsair stock suffers manic-depressive swings, like Black Friday when it plunged 9.42%, while Activision rallied 2.13%. Unlike many tech IPO's, Corsair is already profitable. Also, its first reporter quarter saw a slam-dunk: an EPS of 52 cents blowing past the street's 26%. The average price targer at $31.56 and the two analysts who follow Corsair stock rank it an outperform. Read 3 Epic Video Game Stocks to Play! for our full analysis.
$40.225
Stock price when the opinion was issued
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PARTIAL BUY
They make high-end videogame equipment like cooling systems and PC cases, which they charge at a 11%-86% premium. Went public in late-September, started flat, but then surged in October. Half-billion people worldwide play videogames at home, man; 100 million spend $1,000 to set up their PC to play games. The market is huge. CRSR also make their own PCs. Corsair knows what customers want and how to sell to them. They have an 18% market share in high-end gaming and rank #1 or #2 in many categories. This is nearly a pure-play stock on e-sports which they sponsor. They posted 42% revenue growth YOY in the first half of this year. They just started turning a profit. The big money is in their peripherals which are expected to climb in coming years. Problem is heavy competition. Also, their acquisitions are raising debt levels. Analysts predicts their components business will flatline in the next three years, but account for only 36% of gross profits. Also, private equity owns 78% of Corsair. Trades at 1.4x sales. They report next week. Buy a tranche now and wait for that report.
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PARTIAL SELL
He likes it. It's become another meme stock. It jumped 11% today, but was a lot higher at the open.The meme people basically work for the short-sellers. Let the memers pump stocks like this, so you can sell high. He feels that the Reddit traders are trying to stick it to big, powerful Wall Street, but they are failing. He doubts the staying power of this Reddit trade, because Wall St. doesn't care for videogame stocks now. Take profits after another Reddit rally.
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TOP PICK
Stockchase Research Editor: Michael O'Reilly CRSR produces PC-based games of high quality that have boomed through the pandemic. Their recently reported EPS of $0.58 easily surpassed analyst expectations of $0.25. Revenues were up over 70% on the year. The company prudently used cash flow to reduce debt materially and cash reserves are growing. Management revised upwards income expectations by $30 million to $245-$265 million. It trades at 21x earnings compared to peeps at 41x. We would buy this with a stop loss at $25, looking to achieve $47 -- upside potential over 44%. Yield 0% (Analysts’ price target is $46.67)
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