Video Game Sales Up Big Again in April: Three Top Stocks to Buy

Apps & Software

Published: May 19, 2014 8:30 am

The consumer market research firm NPD group says the numbers are in for April sales of video games, and they are up big. Sales grew a whopping 17% for the month and were way ahead of most Wall Street estimates, which were in the low single digits. In a new research report from the Internet and Media team at Stifel, they profile the winners in this big gain in sales. With hardware sales also humming right along, the trend could remain the investor’s friend. Here are Stifel’s three top video games stocks to buy now.

Activision Blizzard Inc. (NASDAQ: ATVI) was a big player with many teens who were recently surveyed who said they were buyers of new next generation consoles. Sales of popular games are sure to follow, and Activision has them, especially its huge hit Call of Duty. The Call of Duty series was launched in 2003. Per Activision, the franchise’s latest release, Call of Duty: Ghosts, launched in Nov. 2013, turned out to be the best-selling game on the next generation PlayStation 4 and Xbox One consoles in the fourth quarter of 2013. Investors are paid a 1% dividend. The stock is rated Buy at Stifel and is a Select List pick at the firm. The Stifel price target for the stock is $26. The Thomson/First Call price target is at $24.22. Activision closed Friday at $20.35 a share.

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Electronic Arts Inc. (NASDAQ: EA) is another leading game developer that should benefit from the continuing rise in console sales. The company produces top-selling games and related content and services under the EA brand in various categories, including action-adventure, role-playing, racing and first-person shooter games. The company is also well known for its EA sports games like Madden Football. EA also has many of its top titles adapted for mobile play, which is big with the teen demographic. The Stifel price target is $41, and the consensus target is $36.58. Shares ended Friday at $34.44.

Take-Two Interactive Software Inc. (NASDAQ: TTWO) offers its products under labels such as Rockstar Games and 2K. It develops and publishes action/adventure products under the Grand Theft Auto brand, as well as other franchises, including L.A. Noire, Max Payne, Midnight Club and Red Dead under the Rockstar Games label. The Grand Theft Auto franchise has been one of the best-selling video games ever released. The Stifel price target is $23, and the consensus figure is at $22.72. The stock closed trading on Friday at $19.09.

With PlayStation 4 and Xbox One sales continuing to be very strong, there is every reason to believe that the second half of the year could continue to be strong for the top video game publishers. In fact, the Stifel team thinks that new titles due for release in the second half of provide a decent line up for consumers. Plus with E3, the video game convention, right around the corner, and the Call of Duty: Advanced Warfare debut highly anticipated, now may be a good time for aggressive investors to own one or more of these top stocks.

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