Three video game stocks to make you a winner
I’ve long been a lover of video games and video game stocks. Call of Duty, Fortnite… Space Invaders. Yes, I’m that old. They’re all great titles that have kept billions of people entertained for decades. Also, the companies that make these games make great investments. Let’s take a look at a few of them.
I put this one at the top of the list because I absolutely love it. I remember spending hours jumping over pits of crocodiles playing Pitfall! on an Atari 2600 when I was a kid. It’s also been a key reason for my success as an investor.
In 2012, I bought it for cheap after the Wall Street pro’s dismissed it as a dog. They thought the rise of mobile games meant it was doomed. Imagine that? A company that had one of the most popular game titles and a 30-year history was going to be eradicated by mobile gaming. I made about 600% on it.
Anyways, it soon will be taken over by Microsoft… sadly.
This is another great company with an over 100 year history of making games. What’s another great thing about this company? It has no debt. Nintendo also has roughly $2.89/share in cash (using Lynch’s cash position calculation). That means an already enticing p/e ratio of 13.35 works out to something more like 9.61. I bought Activision in 2012 for a slightly higher multiple and made a bundle.
Nintendo also has one of the greatest franchises in video game history. Mario is legendary. His stature in pop culture might even rival, dare I say it, Mickey Mouse. If the recently released Super Mario movie that sold $1.36 billion worth of tickets on a $100 million budget is any indication, then yes it is safe to say.
Admittedly, I know less about this company and its titles. It has a market cap of just over $500 million and a compelling p/e ratio of 5.09. Its bread ‘n butter title is Ragnorak Online. Like Nintendo this is another company with no debt. It’s cash position is roughly $45/share which would give it a p/e ratio of 1.91. An absolute steal.
Why this company is trading at such bargain prices is a mystery. Perhaps it’s because just over 50% of its shares are owned by another video game producer GungHo of Japan? Maybe it’s history of management issues scares investors? Maybe it’s just too small for Wall Street to consider? I don’t get it. Anyways, at this price it’s hard to lose.
It’s difficult to categorize these stocks. Nintendo might be a Stalwart turned Fast Grower? It’s roughly 0.60 PEG ratio certainly suggests Fast Grower. Same goes with Gravity. It’s PEG ratio is 0.06. Not bad for a company that’s been around more than two decades.
I won’t bother trying to categorize Activision since it’ll soon be absorbed into Microsoft. Again, I’m sad to see it go. Luckily, there are other video games companies worth investing in.