Design Your Portfolio of Gaming Stocks and ETFs September 7, 2021

Design Your Portfolio of Gaming Stocks and ETFs

Despite its size and meteoric growth, the video-game industry still has room for development. It has been identified by many as one of the few winning sectors in this pandemic. For the past two years, business shutdowns and social distancing have limited people’s entertainment options, driving them to play video games at home.

Game downloads across the world spiked during lockdowns. Companies such as Nintendo (NTDOY) and Electronic Arts (NASDAQ: EA) are among the leading video-game companies that have reported revenue growth due to increased consumer interest globally.

Below are three of the recent fastest-growing video-gaming companies:

Video-gaming stocks
Stock price (US$)(27/08/21) Market Cap (US$bn) EPS Revenue growth (%)
Enthusiast Gaming Holdings Inc. (EGLX) 4.28 0.676 -0.32 333.2
Activision Blizzard Inc. (ATVI) 116.345 64.11 3.34 24.6
Take-Two Interactive Software Inc. (TTWO) 214.625 18.51 5.61 9.2

Source: www.poems.com.sg

Enthusiast Gaming Holdings (NASDAQ: EGLX)

Founded in Canada, Enthusiast produces video games and hosts eSports events on social media. It uses its platform to connect eSports and video-game fans worldwide.

2Q21 was an exceptional quarter for Enthusiast, which expects further sequential revenue growth and margin improvements through the rest of the year. This would be driven by momentum in its direct sales and pipeline of acquisitions.

Activision Blizzard (NASDAQ: ATVI)

ATVI has three main divisions. It is the largest video-game software company in the video game sector by revenue.

Playstation, Xbox and PC games are just a few of the interactive entertainment titles it develops, publishes and distributes. Its main franchises include World of Warcraft and Call of Duty.

ATVI’s video-game properties are ranked among the most valuable in the industry, contributing heavily to gaming’s growth and development. The company has released multiple successful games under CEO Bobby Kotick’s leadership and has consistently distributed dividends since 2010.

Take-Two Interactive Software (NASDAQ: TTWO)

Take-Two develops, publishes and markets interactive entertainment for consoles, personal computers, smartphones and tablets. Playdots, Rockstar Games, Private Division, 2K and Social Point are some of its game development and publishing ventures.

A stellar performance by its core franchises has boosted its valuations rapidly. Its Grand Theft Auto series is one of the most profitable in gaming entertainment. This series is also the company’s biggest and most important product to date.

Take-Two’s Red Dead Redemption series has received accolades while its NBA 2K basketball series is a leading sports game. That’s not all. Helping to drive growth are smaller series and other development programmes.

Take-Two’s top franchises consistently deliver exemplary products in the complex and resource-intensive world of game development. This is thanks to the company’s repeated ability to delight players and generate high levels of engagement and in-game spending. As a result of its strong financials, Take-Two has also been able to pursue growth opportunities in mobile games and eSports.

The following are the three best-value video-game stocks on our watchlist. They have the lowest P/E ratios in the video gaming industry.

Best-value video gaming stocks
Stock price (US$)(27/08/21) Market Cap (US$bn) P/E ratio
Nintendo Co. Ltd. 353.86 62.07 13.22
SciPlay Corp. (SCPL) 18.75 2.35 121.62
The9 Ltd. (NCTY) 14.99 0.176 0.89

Source: www.poems.com.sg

Nintendo (NTDOY)

NTDOY is a Japanese multinational consumer electronics and video-game company. In addition to portable and console game machines, it makes software, mobile devices and consumer electronics. NTDOY is well known for its game consoles Nintendo Wii, Nintendo DS and Nintendo 3DS.

SciPlay Corp. (NASDAQ: SCPL)

SCPL develops and publishes digital games for mobile platforms and the web. In addition to casino games, it offers casual and bingo games such as MONOPOLY SLOTS and Bingo Showdown.

The9 (NASDAQ: NCTY)

NCTY is a Chinese Internet company specialising in mining cryptocurrencies and developing proprietary or licensed online games. It offers mobile, TV and online virtual community games.

For investors who are interested in ETFs, the following are three that invest in video-game and related equities.

The first is the Wedbush ETFMG Video Game Tech ETF (GAMR). Started in March 2016, one of its top holdings is WeMade, a publisher of video games in South Korea. Another is Roblox (RBLX), a US-based video-game platform.

NERD (Roundhill Bitkraft Esports & Digital Entertainment ETF) began trading in June 2019. Its top holdings are Corsair Gaming (CRSR) and Activision. As well as Modern Times Group, Tencent and Turtle Beach (HEAR), NERD holds stakes in companies like Modern Times Group, a Swedish digital entertainment firm.

The VanEck Vectors Video Gaming and eSports ETF (ESPO) has been trading since October 2018. Top holdings are graphics chip maker Nvidia (NVDA), Singapore-based Sea (SE) and Tencent. Additionally, it owns significant stakes in Nintendo and Advanced Micro Devices (AMD).

The world loves entertainment of all sorts and video games are a particularly compelling form of entertainment. Over the next few years, video games will likely continue to grow in popularity globally, allowing game publishers to expand in both developed and emerging markets by reaching new players.

Some video-game companies may not be able to continue creating successful franchises, but those that can help to develop the industry further will likely reap the greatest rewards. It may be worth the while of investors to keep in touch with this industry.

References:


Contributor:

Design Your Portfolio of Gaming Stocks and ETFs

Stephen Ong
Investment Specialist, Phillip Securities Pte Ltd
Senior Account Executive, Phillip Futures Pte Ltd
(a member of PhillipCapital)
Email address: stephenongch@phillip.com.sg

Disclaimer

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

About the author

Stephen Ong
Investment Specialist, Phillip Securities Pte Ltd
Senior Account Executive, Phillip Futures Pte Ltd

Stephen services a portfolio of diverse clients, offering them actionable financial insights on multiple asset classes. He has over 20 years of experience in stocks, FX, CFDs and derivatives, providing advice on how best to implement successful trading plans. Stephen has also developed versatile trading strategies for stock markets with the application of statistical models and trading systems on company stocks. He holds a Bachelor in Business Administration and has won accolades for his work as a Phillip CFD specialist. He is a regular contributor of stock analysis and commentaries to Phillip Futures Market Research and a market commentator for FM 95.8 and FM 96.3.

Related Articles

Back in Business: The Return of IPOs & Top Traded Counters in March 2024 Back in Business: The Return of IPOs & Top Traded Counters in March 2024
From $50 to $100: Unveiling the Impact of Inflation From $50 to $100: Unveiling the Impact of Inflation
Japan’s Economic Resurgence: Unveiling the Tailwinds Behind Nikkei 225’s Record Leap Japan’s Economic Resurgence: Unveiling the Tailwinds Behind Nikkei 225’s Record Leap
What Makes Forex Trading Attractive? What Makes Forex Trading Attractive?
Market Journal

Join Events & Seminars

Learn best practices and latest market outlook from experts and special guests
Market Journal

Hear & Ask our Experts

Join live weekly market calls
Market Journal

Read Popular News & Reports, Technical Pulses

at www.stocksbnb.com
Market Journal

Subscribe to our YouTube Channel

New video every week

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com