Stockchase-logo
Track Stocks Watchlist
Top Picks Today
=iconClose Home All Opinions Top Picks Stocks Experts Top Experts Panic-proof Top 100 Stocks Monthly gems News
Watchlist Track Stocks
Top Picks Today
Home » Weekly Top Picks

4 More Alluring Gaming Stocks for the Win

Allan Tong Posted On December 8, 2020
0
0
Shares
  • Share On Facebook
  • Tweet It

Gaming Stocks

Discover What's Inside

  • Gaming Stocks
    • Nintendo (NTDOY-OTC)
    • Take-Two Interactive Softwar (TTWO-Q)
    • Tencent Holdings Ltd (TCEHY-OTC)
    • VanEck Vectors Video Gaming and eSports ETF (ESPO-Q)

Gaming Stocks

We’re extending last week’s coverage of video games to look at a few more gaming stocks, but also at a couple of chipmakers, who are essential to the industry. Unfortunately, the rising number of Covid cases continues to drive these stay-at-home plays and will continue this winter. Many gaming stocks are approaching 52-week highs, but I expect a little more upside due to the current holiday shopping season and the upcoming releases of the PlayStation 5 and Xbox Series X/S. Actually, these demand for these new systems helped lead to a surprising 13% decline in console spending over the recent Black Friday weekend, usually a boom time for games. The upside is that gamers are snapping these units off the shelves, demonstrating that demand is rabid.

Nintendo Stock

Nintendo (NTDOY-OTC)

In fact, sales of the Nintendo Switch console soared 136% YOY in October, making the Switch the second-biggest seller in any October. Looking ahead, the company that gave the world Mario and Donkey Kong will release the Nintendo Switch 2 in early 2021. Specs and pricing are to come, but if the gaming blogs are any barometer, customer interest is high. For either console, there is a large, popular library of game titles to draw from.

This year, Nintendo has released 20 games that have sold over one million copies. New Horizons has sold more than 14 million to date, and Super Mario 3D over 5 million. The average Switch player owns seven games, which is where the profits lie. Note that given lockdowns, digital sales online have soared 139% YOY, which boosted profits 244% in the first half of this fiscal year. With stores closed, Nintendo has raised its forecasts in console sales from 19 to 24 million and operating profit by 50%.

Trading on the Nasdaq, NTDOY stock pays a 2.81% dividend yield and trades at a 17x PE, compared to 27x a year ago. Activision Blizzard pays only 0.51% and trades at nearly 24x. The Home of Mario does face competition from the PS 5 and the Xbox, but these are nothing new. As of this writing, NTDOY stock is trading $4 below its 52-week high, and it’s reasonable to predict that it will break that level this winter. Game on.

Take-Two Interactive Softwar Stock

Take-Two Interactive Softwar (TTWO-Q)

Next up is TTWO stock. Their games include the massive hit, Grand Theft Auto, NBA 2K and WWE 2K. In fiscal 2020 YOY, TTWO’s revenue increased 16%. Their recurrent consumer spending, driven by online play, spiked 29%. Again, digital is key, given its wide margins. We can thank Covid lockdowns for that. TTWO’s total revenues from digital deliveries leapt 41% and made up 77% of its topline for 2020. This led to net income climbing 21% to $404 million for the year.

So, things look rosy looking back. What about the future? Take-Two itself warns that its revenue will flatten and net income to decline 4%, although net bookings could increase 5-9%. Further, TTWO stock trades at a 44x PE, higher than its peers, and doesn’t pay a divvy. As of this writing, the stock is making a 52-week high of $184, though the entire space is rallying too. This is just $7 shy of its price target. TTWO stock will likely reach that, but I don’t see much upside here. That high PE gives me pause. If you own this already, take come profits. Otherwise, there are better gaming stocks to play.

Tencent Holdings Ltd Stock

Tencent Holdings Ltd (TCEHY-OTC)

This Chinese tech colossus does many things, including cloud computing, fintech and video games, which accounted for 34% of revenues in Q2. That may not sound like a lot, but consider that TenCent‘s market cap is 35 times larger than Take-Two’s. Therefore, TenCent is the world’s biggest publisher of video games, including Honor of Kingsand Peacekeeper Elite.

The company also owns large interests in Fortnite publisher, Epic Games, and varying interests in PUBG publisher Krafton, Activision Blizzard, and Ubisoft. Covid has driven Tencent’s online gaming revenue, which soared 40% YOY last quarter as more users in China and abroad played games on their smartphones.

TenCent’s other businesses have also been firing on all cylinders, and a major headwind—Trump’s trade war—has now vanished. TCEHY stock pays only a 0.2% dividend and trades at a high 56x PE. Well, that’s high by video game standards, but minute compared to Amazon‘s 92x. Then again, Microsoft—which owns a small interest in games—trades at 34x, and TenCent’s own PE a year ago stood at 37.44x. TCEHY stock is trading less than US$6 below its 52-week high of $81.35.

However, the Chinese government’s recent threat to break up China’s tech giantscasts a shadow over TenCent. This and the recent run-up make TCEHY a stock to watch.

VanEck Vectors Video Gaming and eSports ETF Stock

VanEck Vectors Video Gaming and eSports ETF (ESPO-Q)

Player four on this list is intended for ETF investors who want to play this sector, but can’t decide on a single stock. Top holdings are (in this order): TenCent, NVIDIA, AMD, Sea Ltd. and Nintendo with Activision and Take-Two further down the list.

Be aware that the ESPO ETF pays only a 0.13% dividend and the MER charges 0.55%. Also consider that ESPO ETF is currently trading at all-time highs around $68. YTD, this ETF has popped 73%. Can it rise more? I think so, but it’s moved $9 in the past month and may be running ahead of itself. Wait for a pullback.

0
Shares
  • Share On Facebook
  • Tweet It




Trending Now
This Week's Stock Picks & BNN Top Picks Summary: SLF-T, TA-T and 19 Stock and 1 ETF Top Picks (Apr 25-May 01)
Melisa R. H. May 2, 2025
Weekly 52-Week Low (or 52-Week High): DPM-T, III-T, SOY-T, IPO-T and More 52-Week Highs and Lows (Apr 16-22)
Melisa R. H. April 23, 2025
Vaccine news lifts markets awaiting stimulus
Read Next

Vaccine news lifts markets awaiting stimulus

  • logo

    We’re fintech passionates that reinvest almost all our revenues into the development of Stockchase and Wealthica. We hope you enjoy Stockchase and join Premium!

  • Top Reviews

    • Questrade Review: Pros & Cons of Trading with Questrade Canada (2023)
      8.5
    • The Ugly Truth About Identity Theft – Free Credit Report
      7
    • Questrade vs Others | The Review Competitors Don’t Want you to Read (2023)
  • Popular Posts

    • This Week's Stock Picks & BNN Top Picks Summary: SLF-T, TA-T and 19 Stock and 1 ETF Top Picks (Apr 25-May 01)
    • Weekly 52-Week Low (or 52-Week High): DPM-T, III-T, SOY-T, IPO-T and More 52-Week Highs and Lows (Apr 16-22)
    • Most Anticipated Earnings: NGT-T, WCN-T and more Canadian Companies Reporting Earnings this Week (Apr 21-25)
  • Stock Lists

    • Unraveling 15 of the Best Natural Gas Stocks: A Canada-USA...
      November 10, 2023
    • 13 Recession-Proof Stocks for Portfolio Safety
      October 26, 2023
    • The Ultimate Top Drone Stocks List for Sky-High Returns...
      October 25, 2023
    • Top Hotel Stocks to Buy for your Growth Portfolio
      October 12, 2023
    • Which Brookfield Stock to Buy? BAM vs BN: the Inspiring...
      October 9, 2023



  • Stockchase neither recommends nor promotes any investment strategies.

    About us : Privacy & Terms : Contact us

© Stockchase Inc.
Press enter/return to begin your search