3 Strong Buy Gaming Stocks to Add to Your Q2 Must-Watch List
Gaming has often flown under the radar in the entertainment space, but it continues to command a massive and growing presence. In fact, the most financially successful entertainment property in history is actually a game called Grand Theft Auto V. With that game alone selling 175 million copies globally, it shows the tremendous financial potential within the gaming space. Therefore, investing in strong-buy video game stocks can be incredibly lucrative.
Moreover, the gaming industry continues to flourish globally, driven by mobile gaming and growth in new console technology. Additionally, the rollout of 5G networks will further accelerate this trend by addressing the challenges of low bandwidth and high latency, which previously impacted mobile gaming. That said, here are three strong buy video gaming stocks worth betting on now.
Strong-Buy Gaming Stocks: Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has become a mainstay on the top-performing lists across nearly every major tech vertical. Gaming is no different, with it operating a multifaceted strategy to expand its position in the niche. Its strategy involves inclusivity, cross-platform play, and accessibility through subscription services like the Xbox Game Pass. Recent developments have involved acquiring top video gaming giants such as Activision Blizzard (NASDAQ:ATVI), propelling it as the third-largest gaming business globally.
Its inroads in the gaming space have paid many dividends, with the company’s gaming sales soaring from $9.05 billion to $15.46 billion from 2017 to 2023. This represents a massive increase of over 70%, reflecting its gaming division’s strong expansion and the industry’s overall growth. As we advance, with MSFT’s investments in AI and other complementary technologies, its gaming division will continue to be a force to be reckoned with.
Electronic Arts (EA)
Electronic Arts (NASDAQ:EA) presents an enduring bull case in the video gaming space, housing popular franchises, including FIFA, Madden NFL, and Apex Legends. Over the years, EA has effectively embraced the evolving market trends in its niche to secure a huge chunk of the global video game market.
Furthermore, its diversified games lineup has effectively ensured healthy top-and-bottom-line growth expansion over the years. Moreover, its swift response to the battle royale trend with Apex Legends shows its ability to adapt and spread its tentacles in a burgeoning new segment. Also, the shift to digital distribution has been lucrative for EA, enhancing its profit margins through its robust direct-to-consumer sales. EA boasts stellar profitability metrics, with more than 20% key margins. Moreover, its free cash flow margin is a remarkable 25%, 208% higher than the sector median. Hence, despite its challenges, its powerful track record of navigating the gaming landscape points to a remarkably bright horizon ahead.
Roblox (RBLX)
Roblox (NYSE:RBLX) is a top metaverse gaming platform that effectively marries diverse gaming experiences with a vibrant social community. Over the years, the platform has exploded in popularity by empowering its growing user base with unique tools to craft personalized worlds while rewarding them with real-world value with in-game currency.
The pandemic took Roblox’s top-and-bottom-line to a whole new level, but navigating the post-pandemic economic maze wasn’t that simple. However, recent results point to an emphatic comeback, with it posting double-digit year-over-year (YOY) growth in the past six consecutive quarters, coupled with strong analyst beats.
Following another solid showing in its fourth quarter (Q4), the company expects sales to grow at least 20% annually through 2027. With a strong outlook and robust operating results of late, Tiprank’s analysts estimate an incredible 32% upside from current price levels.
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.
