Best video game stocks to buy in 2021
Update: May 7, 2021, 11:22 a.m.
The video game industry is a large and rapidly growing sector that still has significant potential for expansion. The best companies in the industry have benefited from the surge in demand created by COVID-19, and the impressive performance of their stocks proves that video games are a resilient and steadily growing industry. Player engagement is skyrocketing, although social distancing and work-from-home measures have presented new challenges for game developers.
The best video game stocks
Companies that continue to adapt to the demands of gamers and shape their tastes for interactive electronic entertainment are well positioned to deliver excellent returns to shareholders. Capcom (OTC: CCOEF), Zynga (NASDAQ: ZNGA), Take-Two Interactive (NASDAQ: TWO), Activision Blizzard (NASDAQ: ATVI), and Electronic arts (NASDAQ: EA) stand out as the best gaming stocks to buy as long-term investments. Let’s take a closer look at each of these companies:
Video game developer and publisher Capcom (OTC: CCOEF) is booming, with successful releases that have strengthened its key franchises and produced impressive sales and profit growth. In addition to his resident Evil and Monster hunter franchises, the company’s properties include Mega man, The devil can cry, and Street fighter. Capcom also has a comprehensive library of lesser-known but popular classic games.
There are plenty of reasons to love this longtime Japanese company, which has been a mainstay of the video game industry for decades and has created some of the media’s most memorable gaming experiences.
Capcom pay a dividend and, through its dividend payments, aims to return approximately 30% of its annual profits to shareholders. Profits can be erratic in the video game industry, but Capcom management clearly prioritizes returning money to shareholders.
Zynga (NASDAQ: ZNGA) is a mobile-focused video game developer and publisher that got its start with browser games on Facebook (NASDAQ: FB). When mobile games gained popularity, the company struggled but managed to successfully pivot its business. Zynga is once again increasing its sales and profits through its ability to monetize its major franchises.
Zynga’s recent series of successful acquisitions is also driving its strong financial performance. The California-based video game company bought development studios to bolster both its development resources and its portfolio of titles. Zynga now owns several popular games, including CSR race, Cartoon explosion, and Empires and puzzles, and some of the company’s early properties, such as Zynga Poker and Words with friends, still hire many people. Zynga has a lot of money despite acquiring multiple companies, and it’s likely to continue to create new hits and buy more development studios.
2. Take-Two Interactive
Take-Two Interactive‘s (NASDAQ: TWO) valuation increased rapidly, thanks to the exceptional performance of its main franchises. Grand Theft Auto is the company’s largest and most significant property and, as a series, one of the most profitable of all gaming entertainment. Take-Two Red Dead Redemption the series is well received and its NBA 2K The basketball series is a leader in the sports games category. The company also has a variety of small series and other development initiatives that help drive growth.
Game development is usually complicated and resource-intensive, but the development studios of Take-Two’s top franchises have repeatedly delivered outstanding products. Take-Two is adept at thrilling gamers and driving high levels of engagement and spending in the game. The company’s strong financial position allows it to aggressively pursue new growth opportunities in categories such as gaming. mobiles and esports.
4. Activision Blizzard
Activision Blizzard (NASDAQ: ATVI) is the largest video game software company by revenue and consists of three main divisions. King Digital primarily develops and publishes mobile games, Activision focuses on developing console platforms, and Blizzard has produced some of PC gaming’s biggest hits. Together, the company’s video game properties are among the most valuable in the industry, and Activision Blizzard is benefiting and shaping the evolution of the game.
The publisher is responsible for well-known gaming franchises, including Call of Duty, Monitoring, World of warcraft, and Candy Crush Saga, and Activision Blizzard is also one of the first leaders in the field of esports. Under the leadership of CEO Bobby Kotick, this video game company has a solid track record of successful game releases, and the company has been paying a regular dividend since 2010.
5. Electronic arts
Founded in 1982, Electronic arts(NASDAQ: EA) has played and continues to play a pivotal role in the advancement of the interactive entertainment industry. It is the second largest video game company in terms of revenue and maintains a leading position in the sports games subgenre.
The pioneering game publisher owns popular licensed franchises including Madden NFL and FIFA, in addition to a stable of high-level original assets, including The sims, Apex Legends, and Battlefield. Electronic Arts’ acquisition of Glu Mobile in June 2021 indicates that the company is now aggressively focused on expanding into mobile games.
Video games should continue to develop
People enjoy all kinds of entertainment, and video games offer a wide range of experiences that can be particularly compelling. The global popularity of video games will likely continue to grow over the next several decades, providing major game publishers with ample opportunities to reach new players and increase their sales in developed and emerging markets.
While not all video game companies will continue to produce popular franchises, those that drive the development and growth of video games themselves are likely to benefit the most from the continued growth of games.
Keith Noonan owns shares of Activision Blizzard, Take-Two Interactive, and Zynga. The Motley Fool owns shares of and recommends Activision Blizzard, Facebook, Take-Two Interactive, and Zynga. The Motley Fool recommends Electronic Arts and recommends the following options: long January 2023 $115 calls on Take-Two Interactive. The Motley Fool has a disclosure policy.">
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