Although the concept might sound utterly ridiculous to those stemming from particular generations, the rise of video game professionalism implies strongly that investors should at least consider e-sports stocks to buy. For evidence, just turn to the International Olympic Committee (IOC).
In November last year, the IOC confirmed that Singapore will host the first Olympic E-sports Week later this June. Per the accompanying press release, “[t]he announcement marks the next major step in supporting the development of virtual sports within the Olympic Movement and engaging further with competitive gamers.”
That’s one reason to consider e-sports stocks to buy.
Another? The industry represents a potential growth monster. According to Grand View Research, the global e-sports market reached a valuation of just over $2 billion in 2021. Between 2022 and 2030, experts estimate that the segment will expand at a compound annual growth rate (CAGR) of 21.9%. At the culmination of the forecasted period, the sector may command total revenue of $12.49 billion.
From the enthusiasm to the hard numbers, the conclusion is obvious: gaming excites, gaming pays. Below are e-sports stocks to buy.
|Take-Two Interactive Software
|Allied Gaming & Entertainment
Electronic Arts (EA)
One of the top video game publishers, Electronic Arts (NASDAQ:EA) also enjoys significant clout as a candidate for best e-sports stocks to buy. That’s because several of its top franchises such as Madden and FIFA organically facilitate e-sports competitions.
What really stands out here is that Electronic Arts owns the licensing rights for top sports leagues.
Technically speaking, gamers often complain that other gaming publishers deliver superior products. However, the reality is that EA owns those valuable licensing rights, giving it an advantage over anybody else.
Fundamentally, I don’t expect EA to change course in that regard. Certainly, Wall Street analysts also believe the company runs on the correct trajectory. Right now, they peg EA as a consensus moderate buy. Also, their average price target stands at $133.77, implying a healthy upside.
Take-Two Interactive Software (TTWO)
Another top-tier name in the video game publishing ecosystem, Take-Two Interactive Software (NASDAQ:TTWO) owns some gritty franchises, such as Grand Theft Auto and Red Dead Redemption.
Take-Two leans toward a more mature audience. However, this “bad boy” appeal also works in its favor. Since the start of the year, TTWO gained nearly 13%.
Regarding its viability as one of the e-sports stocks to buy, Take-Two acquired mobile gaming specialist Zynga. With this new addition to the corporate lineup, Take-Two fosters mobile e-sports competitions, a growing niche within the gaming ecosystem.
Buying TTWO may require some nerves of steel. Financially, it doesn’t feature the most encouraging profile. Gurufocus.com warns that it could be a possible value trap. However, its three-year book growth rate pings at 22%, outpacing nearly 70% of its peers.
Also, Wall Street analysts peg shares as a consensus strong buy. Moreover, their average price target stands at $129.68, implying upside potential.
When it comes to e-sports stocks to buy, a holistically balanced portfolio will include more than just gaming publishers.
Indeed, today’s most advanced titles require gobs of computing power. And as graphics become more complex and realistic, processor upgrades become necessary. That’s where Nvidia (NASDAQ:NVDA) comes into the picture.
In recent years, Nvidia captured business headlines for its work in artificial intelligence, machine learning and autonomous driving. Its graphics processing units also garnered attention for their utilization as blockchain mining rigs. However, we must remember Nvidia’s first love – delivering GPUs to computer gaming enthusiasts.
As e-sports expands and goes even more mainstream, NVDA can ride coattails. It’s a risky venture but everything with significant upside comes with risks. Fundamentally, then, NVDA ranks among the top e-sports stocks to buy.
With relations between the U.S. and China surely at a worrying low, mentioning Tencent (OTCMKTS:TCEHY) might not appeal to everyone.
However, if you invest under a geopolitically agnostic framework, Tencent may be difficult to ignore. After all, it’s a massive technology and entertainment conglomerate. And by virtue of having the biggest country population-wise, China also owns the biggest consumer market.
According to industry journal Inside the Games, Tencent represents a key figure in the e-sports ecosystem. Specifically, the company is the “publisher of League of Legends in China and runs the associated Pro League and World Championship.”
Tencent also has stakes in three of the e-sports-focused streaming platforms in China, one of which is on this list.
Financially, Tencent offers a fairly attractive profile. First, its balance sheet enjoys fiscal stability. Second, on an operational level, both its revenue growth rate and net margin stand above their sector median stats.
Therefore, if you can ignore the geopolitical drama, TCEHY makes for an intriguing candidate for e-sports stocks to buy.
A subsidiary of Tencent, Huya (NYSE:HUYA) is a Chinese video live-streaming service. It’s one of the largest platforms of its kind, attracting millions of gamers.
According to data from Statista.com, in the third quarter of 2022, Huya recorded 5.5 million paying users. Given the projected trajectory of e-sports stocks, this number could easily accelerate over the next few years.
Again, geopolitics represents a broader headwind for all China-based securities. At the same time, the Chinese government imposed a draconian crackdown on the coronavirus pandemic, a protocol that it only recently lifted. Essentially, then, pent-up demand may exist, which could theoretically bolster Chinese equities as a rising-tide play.
Gurufocus.com labels HUYA as a possible value trap. However, the company enjoys a stable balance sheet, marked especially by a robust cash account. Therefore, it might be worth considering as one of the speculative e-sports stocks to buy.
Notably, Wall Street analysts peg HUYA as a consensus moderate buy though shares already exceeded their average price target.
Sea Limited (SE)
Turning to the speculative portion of e-sports stocks to buy, Singapore-based Sea Limited (NYSE:SE) earlier carried much potential.
As a technology conglomerate, it offered relevancies in e-commerce, financial technology and gaming entertainment.
Sea owns Garena, a leading online games developer and publisher with a global footprint across more than 130 markets.
On the one hand, SE stock gained over 21% in equity value so far this year, but on the other hand, shares plunged 57%. In turn, Gurufocus.com warns that Sea may be a possible value trap.
Still, it’s not without merits. Among Wall Street analysts, they peg SE as a consensus moderate buy. Also, their average price target stands at $89.77, implying serious upside potential.
Allied Gaming & Entertainment (AGAE)
Easily one of the riskiest e-sports stocks available, prospective investors of Allied Gaming & Entertainment (NASDAQ:AGAE) should consider shares as a high-risk wager.
True, AGAE shares popped up nearly 26% in the year so far. However, in the trailing 365 days, they remain 25% below parity. As if that wasn’t warning enough, since its public market debut (under its original name), AGAE fell nearly 86%.
Despite significant risk factors, Allied Gaming still attracts speculators, mainly because it may very well represent the future of e-sports.
Featuring a network of leading innovative e-sports properties, Allied aims to host several tournaments in any given year. Unfortunately, the brutal Covid-19 crisis disrupted the company just as it was getting rolling. However, with pandemic fears fading, AGAE may enjoy a significant upside.
Financially, Allied presents myriad risks. However, prospective speculators should note that it carries zero debt on its books. With so much turmoil going on, that’s a major attribute.
On the date of publication, Josh Enomoto 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.