3 Gaming Stocks with Big Upside Potential
Gaming stocks have taken center stage with the evolution of gaming from a niche hobby to a mainstream phenomenon. With impressive price tags attached to video games, it’s no wonder investors are always on the lookout for the best gaming stocks with huge growth potential.
Today’s leading gaming businesses are pushing the boundaries of hardware and software along with facilitating the reimagining of business models. According to Grand View Research, the global video game market was valued at a massive $195.65 billion in 2021, with experts projecting the sector to grow by a tremendous 12.9% from 2022 to 2030. By the conclusion of the forecasted period, the sector’s revenue could reach a staggering $583.69 billion.
With such promising prospects on the horizon, let’s look at these three gaming growth stocks that offer significant upside potential in this exhilarating industry.
Gaming stocks To Buy: Electronic Arts (EA)
Electronic Arts (NASDAQ:EA) is one of the top dogs in the video gaming sphere, with an array of popular titles in its repertoire. Its video game titles cover a wide range of genres, including sports, racing, shooting, action, role-playing, and others. Consequently, it has established itself as one of the world’s largest video game developers, with annual sales exceeding the $7 billion mark.
Growth rates have slowed in the past couple of quarters due to multiple delays and cancellations of some of its hotly anticipated titles. It recently shelved the release of its Battlefield and Apex mobile games. Moreover, it delayed the release of the latest installment of its Star Wars franchise by a month to April 28.
However, there is plenty to like about EA over the long run. For instance, the latest release of its popular soccer title FIFA 23, is pacing to become the biggest title in franchise history, delivering record engagement numbers. Additionally, it is looking to dabble with generative AI, hoping to test it on its upcoming titles to enhance the user experience and grow its business.
Unity (U)
Unity (NYSE:U) continues to lead the pack with its robust gaming engine, which boasts a market share of roughly 70% in mobile gaming. This widespread adoption translates to a steady revenue stream evidenced by a 5-year average sales growth of a whopping 40%.
Its command over the mobile gaming landscape is impressive, especially given the rapid growth of niche compared to the broader gaming industry. Additionally, the company’s strong foothold in the burgeoning virtual reality segment adds another layer to its phenomenal growth story. Moreover, the network effect Unity enjoys is a testament to its staying power, allowing it to become a self-perpetuating force in the gaming world.
Unity will continue to produce strong results across both lines as a trailblazer in the fastest-growing market segment. Also, U stock trades at 6.7 times trailing twelve-month sales, roughly 68% lower than its 5-year average.
Take Two (TTWO)
Take Two (NASDAQ:TTWO) is a gaming powerhouse with some of the most popular video game franchises ever under its umbrella. One of its top subsidiaries is Rockstar Games, which is arguably the most innovative video gaming publisher of our time.
It’s the publisher behind two of the most successful video game franchises of all time, Grand Theft Auto and Red Dead Redemption. Grand Theft Auto Five alone has sold north of 175 million copies worldwide since its release over a decade ago. Apart from that, it also produces yearly iterations of its fan-favorite sports titles like NBA 2K and WWE 2K from its 2K Sports division.
Capitalizing on its monstrous success, Take Two has embraced growth opportunities by investing in other companies, such as its acquisition of titan Zynga last year. This forward-thinking approach demonstrates its ability to adapt and thrive in an ever-evolving gaming landscape, making it a standout player in the space.
Furthermore, the firm continues to kill it with its quarterlies, posting over 40% growth on a trailing twelve-month basis. Its stellar top-line numbers have helped build its massive cash war chest of a whopping $1.1 billion.
On the date of publication, Muslim Farooque 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.
