You don't often hear about the video game industry from Wall Street, but it's on the fast track to becoming bigger than both the film and music industries combined.
The global video game industry is worth a whopping $152 billion right now, while the music and movie industries are worth $19.1 billion and $136 billion, respectively.
Over the next five years, some of the best video game stocks to buy will help push the video game market to even greater heights. Between now and 2021, Statista reports it'll grow 20% to $180.1 billion. By 2025, Global Data says the video game market could rocket up to $300 billion.
That's close to half the size of the global sports industry, too.
These numbers alone might shock some of you, but video games are truly taking over entertainment as we know it.
Just last week, on Dec. 12, 2019, The Game Awards aired in Los Angeles. The Hollywood Reporter says that more than 45 million people tuned in to watch. To put that into perspective, 19.9 million watched the Grammys and 29.6 million watched the Oscars, according to the same source.
We're practically living in a gaming golden age, where a single, minute-long announcement like Microsoft Corp.'s (NASDAQ: MSFT) reveal of its next-generation video game console can get over 8 million viewers.
But it's a massive and growing industry that has somehow managed to fly under most investors' radars.
That's not necessarily a bad thing, either. It presents an opportunity for savvy folks to buy video game stocks before the industry soars another 100% higher over the next five years.
Unfortunately, with so many blue-chip companies, publishers, and developers in the mix, it can be hard to figure out which video game stocks are worth an investment. This is especially true if you don't regularly follow industry news.
That's what Money Morning is here to help with. Our Money Morning Stock VQScore™ system has pegged these three video game stocks as buys right now.
Check out our top gaming stocks to buy below…
Best Gaming Stock, No. 3: Electronic Arts
With roughly $5 billion in annual revenue and over $1 billion in net income, Electronic Arts Inc. (NASDAQ: EA) is the second biggest gaming company in the United States. That's on top of its consistent share price growth since its 1989 IPO.
EA is commonly known for its video game sports franchises like "FIFA" and "Madden." But it's also the publisher behind the critically acclaimed and Games Award-nominated franchise "Apex Legends" – which hit 50 million players in a little under one month after release.
While EA stock fell nearly 48% in 2018 over controversial "loot boxes" (in-game purchasable items that give you randomized rewards), it has worked hard to reverse its mistakes.
Over the course of 2019, it has gained over 40%. This is thanks to the massive success of "Apex Legends" and its latest critically acclaimed game, "Star Wars Jedi: Fallen Order."
This new "Star Wars" series comes from the same minds that gave "Fortnite" a run for its money earlier this year with the release of the free-to-play game "Apex Legends."
With EA's renewed focus on narrative-driven video games, while also leaning into the free-to-play market, the company continues to prove why it's one of the biggest video game stocks out there.
The narrative stories appeal to the hardcore audience, while its free-to-play titles cash in on the extremely lucrative business model that has popped up in recent years. While these games are free to download, there is often an "in-game" store that lets players buy upgrades to improve their playing experience.
According to TechCrunch, free-to-play games have contributed $88 million to the total gaming market…
So, as EA continues to rake in billions, grow its share price, and guide the industry as one of the biggest companies around, you won't want to miss out on this top video game stock. And this is especially true now that our VQScore has rated it just outside the "Buy Zone."
Right now, EA stock trades for $105.75 per share. Over the next 12 months, analysts think it could grow 23% to $130 per share.
But the next two video game stocks have received perfect VQScores, and they develop billion-dollar games. In fact, our top video game stock could grow as much as 84%…
You do not want to miss out…
Best Gaming Stock, No. 2: Take-Two Interactive
About the Author
Daniel Smoot is a Baltimore-based editor who helps everyday investors with stock recommendations and analysis. He regularly writes about initial public offerings, technology, and more. He earned a Bachelor's degree from Towson University.