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Record Quarter for Videogame Sales: 5 Stocks to Buy

Zacks

As more people stayed home during the first quarter of the year due to the coronavirus outbreak, they spent a record $10.86 billion on computer games, hardware and accessories, according to a report from analytics firm The NPD Group. The surge was led by Nintendo Co., Ltd. NTDOY, which alone helped push hardware sales up 2% over a year ago, to $773 million.

As stay-at-home orders have been enacted on the federal and state levels, people are left with nothing to do at home except for playing video games. This has seen a sudden surge in demand for video games.

Videogame Sales Spike

According to the fresh report from The NDP Group, videogame sales were up 9% from the same quarter a year ago. Of the $10.86 million, $9.58 billion was spent just on games, up 11% from a year ago, NPD said.


Driving the recording-setting quarter were sales of Animal Crossing: New Horizons, Call of Duty: Modern Warfare, Doom Eternal, Dragon Ball Z: Kakarot, Fortnite, Grand Theft Auto V, Minecraft, MLB The Show 20 and NBA 2K20. Sales of video game accessories, including gamepads, headsets, cases and other peripherals increased 1%, reaching $503 million.

Coronavirus Helps Videogame Industry

Governments across the world are shutting down countries and implementing stay-at-home orders. This has seen certain businesses, including gaming, online streaming and video conferencing, witnessing a boost in user engagement.

According to Sellics, which offers technology for vendors on Amazon.com, Inc.’s AMZN Amazon Marketplace, Switch sales on the ecommerce site have increased 2,979% since the start of 2020 in North America. Switch was also sold out at other major retailers. The report also says that videogame sales have jumped around 500% in the United States on Amazon so far this year.

Our Choices

With stay-at-home orders and lockdown likely to remain in place, let’s look at five stocks that are set to rally in the near future on surging traffic.

Activision Blizzard, Inc. ATVI is a leading developer and publisher of console, online and mobile games. The company’s Call of Duty is one of the most-popular gaming franchises globally. Its Overwatch League can be considered a pioneer of the e-sports concept.

The company’s expected earnings growth rate for the current year is 18.7%. The Zacks Consensus Estimate for current-year earnings has improved 7.7% over the past 60 days. Activision Blizzardhas a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nintendo Co. is a worldwide leader in the creation of interactive entertainment. It manufactures and markets hardware and software for its popular home video game systems, including Nintendo 64 and Game Boy.

The company’s expected earnings growth rate for the current year is 6%. The Zacks Consensus Estimate for current-year earnings has improved 10.9% over the past 60 days. Nintendo has a Zacks Rank #2.

Glu Mobile Inc. GLUU is a leading global publisher of mobile games. Its portfolio of top-rated games includes original titles Super K.O. Boxing!, Stranded and Brain Genius, and titles based on major brands from partners including Atari, Activision, Konami, Harrah's, Hasbro, Warner Bros., Microsoft, PlayFirst, PopCap Games, SEGA and Sony.

The company’s expected earnings growth rate for the current year is 70.6%. The Zacks Consensus Estimate for current-year earnings has improved 16% over the past 60 days. Glu Mobilehas a Zacks Rank #2.

Capcom Co., Ltd. CCOEY plans, develops, manufactures, sells and distributes consumer video game. Its operating segment consists of Digital Contents, Arcade Operations, Amusement Equipments and Other Businesses segments.

The company’s expected earnings growth rate for the current year is 29.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. Capcom has a Zacks Rank #1.

DouYu International Holdings Limited DOYU provides a game-centric live streaming platform. The company operates its platform on both PC and mobile apps. The company’s expected earnings growth rate for the current year is more than 100%. Its shares have gained 8.7% in the past 30 days. DouYu has a Zacks Rank #1.

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