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Is This the Best Gaming Stock to Buy Now?

By Jose Najarro – Sep 13, 2021 at 11:30AM

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The gaming market is expected to grow at a substantial level for the foreseeable future.

Gaming stocks should be on every investor's watchlist as mobile gaming continues to grow globally and given the recent release of the new gaming consoles. Today's video focuses on Activision (ATVI 0.76%), Electronic Arts (EA 0.50%), and Take-Two Interactive Software (TTWO 2.22%) and compares some fundamentals to try to determine which is the better buy. Here are some highlights from the video. 

  1. Activision and Take-Two Interactive Software have seen a correction of over 20% from 52-week high closing prices, while EA Games has only seen roughly a 3% correction. The reaction to Activision's stock price could be due to the recent lawsuits affecting its Blizzard leadership. The response to Take-Two Interactive Software's stock price could be due to the delay of the latest entry in its hit franchise Grand Theft Auto
  2. All three companies own strong franchises with numerous releases due in the upcoming months. Activision has a new Call of Duty game coming out in November. EA Games has multiple sports titles plus a new release in its Battlefield franchise. Take-Two Interactive has numerous titles coming soon and recently acquired Nordeus, a small mobile gaming studio. 
  3. When you look at each company's fundamentals, you'll see that each leads in specific metrics. For the trailing-12-months (TTM) revenue, you will notice that since the pandemic really got going in March 2020, Activision has seen continued growth in TTM revenue. EA Games, on average, tends to have the highest-grossing margins. Take-Two Interactive seems to have the best cash-to-debt ratio. 

Click the video below for my full thoughts and analysis. 

*Stock prices used were the closing prices of Sept. 10, 2021. The video was published on Sept. 12, 2021.

Jose Najarro has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard and Take-Two Interactive. 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. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

Stocks Mentioned

Electronic Arts Stock Quote
Electronic Arts
$132.28 (0.50%) $0.66
Take-Two Interactive Software Stock Quote
Take-Two Interactive Software
$108.76 (2.22%) $2.36
Activision Blizzard Stock Quote
Activision Blizzard
$75.76 (0.76%) $0.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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