Stocks of video game producers NetEase (NASDAQ:NTES), Glu Mobile (NASDAQ:GLUU), and Activision Blizzard (NASDAQ:ATVI) have done extremely well this year, comfortably outperforming the NASDAQ 100 Technology Sector index.

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And these stocks don't look like they will run out of steam anytime soon. Two of them have strong gaming pipelines to take advantage of industry growth trends, while the other is aggressively working toward a turnaround. Let's take a closer look at the reasons why these three companies look set for more upside.

NetEase: Riding terrific mobile growth

NetEase is a Chinese technology company that provides services including games, advertising, email, and e-commerce. Its game partners include Blizzard Entertainment, a subsidiary of Activision Blizzard responsible for games including World of Warcraft and Overwatch, and Microsoft subsidiary Mojang AB, which is responsible for games including Minecraft

NetEase's mobile gaming business is on a tear, supplying  73% of the company's revenue in the fiscal first quarter as compared to 64% in the year-ago period. This isn't surprising as the company has come out with all guns blazing in the mobile gaming space over the past year, setting up an arsenal  of over 100 mobile games.

A woman lying on her stomach on the floor while using her cellphone.

Image source: Getty Images.

NetEase's vast mobile gaming portfolio sets the company on its way to tap growth in China's mobile gaming market that's expected to generate  $21 billion in revenue in 2020 as compared to $11.2 billion in 2016. More importantly, the Chinese online gaming specialist has deployed a shrewd strategy of bringing its popular PC games to mobile, thereby transitioning its users from one platform to another.

This strategy should continue working in NetEase's favor as mobile games are expected to enjoy a greater clout in China's video gaming industry as other platforms such as PC games continue to decline. Newzoo estimates  that mobile will account for 63% of China's mobile gaming revenue by 2020 as compared to just 46% last year, and NetEase will be one of the prime beneficiaries of this trend.

Moreover, the stock is cheap with a trailing price-to-earnings (P/E) ratio  of just 21, which is lower than the industry median  of 33.

Glu Mobile: Turning around

Glu Mobile got off to a rocky start earlier this year as its games were failing to sustain their momentum once the initial hype around their celebrity focus died. Its new strategy aims to improve graphics and gameplay to push in-app purchases higher. It's also started licensing intellectual property from Major League Baseball, so it is now able to use original names and likenesses of all 30 MLB teams in the Tap Sports Baseball franchise, increasing the authenticity of this title.

The good news for Glu investors is that its new strategy is reaping results as its average bookings per monthly active user increased 67% year-over-year during the last reported quarter, indicating that users are spending more money on its games. Not surprisingly, the stock has started gaining momentum of late, rising close to 17% in the past three months.

More importantly, Glu Mobile's bookings for the current fiscal year are 33% higher than 2016, indicating that its revenue could jump substantially since the company's revenue closely reflects its bookings.

Activision Blizzard: Staying strong

Activision Blizzard has been the pick of the lot when it comes to video gaming stocks, rising close to 60% in 2017. The stock is currently trading at the higher end of its 52-week range, but this shouldn't deter investors from making a bet on this video gaming giant given the way its titles are performing.

Activision's titles have terrific staying power as gamers have spent 40 billion hours playing its games, thanks mostly to the popularity of Overwatch, an online multiplayer shooting game. The title added 5 million users to Activision Blizzard's coffers last quarter, taking the registered player base to 30 million. What's more, Activision has found a lucrative way to try to monetize this title by launching an esports league.

Meanwhile, Activision is set to launch a sequel to its highly popular Destiny later this year, which could positively impact its margins due to a higher price point and an expansion pass for gamers to access downloadable content. Not surprisingly, analysts expect Activision Blizzard's earnings to keep growing at a terrific pace, clocking annual growth of over 18% for the next five years.

What's more, the company's forward P/E ratio of 25 is lower than its 13-year median P/E ratio of 29, indicating that it could be good value given its growth potential.

Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Harsh Chauhan has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard. The Motley Fool recommends NetEase. The Motley Fool has a disclosure policy.