Any time you see video games, whether free on a mobile download, or the expensive console variety being advertised during expensive broadcast television and cable programming like sports, you know the industry is charging full speed ahead. This year is no different, and with the holiday shopping season in full-swing, you can bet the companies with the hot titles stand to have a huge fourth quarter.

In a new research report from Cowen, their analyst Doug Creutz, who is one of the best on the street in the space, presents the firm’s Black Friday ordometer results. The ordometer analysis is based on Amazon best-seller data and uses a complicated process to help determine pre-order and post launch sales. With hot new releases out in time for the holidays, the Cowen team crunched a ton of numbers.

Three companies are huge in the sector, and all three are rated Outperform at Cowen.

Activision Blizzard

This company reported outstanding third-quarter earnings, made a huge acquisition and is the top pick at Cowen. Activision Blizzard Inc. (NASDAQ: ATVI) develops and publishes online, personal computer (PC), video game console, handheld, mobile and tablet games worldwide. The company develops and publishes interactive entertainment software products through retail channels or digital downloads; and downloadable content to a range of gamers.

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The company’s Call of Duty franchise, which has propelled earnings for this industry powerhouse for years, came out just in time for the holidays with Call of Duty: Black Ops 3, which showed up as one of the top-selling games over the three-day Black Friday period.

The big news recently was the company’s purchase of Candy Crush saga creator King Digital Entertainment. The Cowen team, and most of Wall Street, thinks the buy is an outstanding move for the company, and specifically the synergies between the two companies is cited. Many analysts feel that the key to unlocking some monster value is creating and cross-promoting the Activision product inside the King Digital mobile distribution network.

Some on Wall Street feel the guidance the company gave when it reported is very conservative. They also think the content Activision will release in the rest of 2015 is outstanding and not fully reflected in the guidance. The growth in the quarter was particularly impressive given two challenges: the strong dollar and unfavorable comparisons to the prior year quarter, which were lifted by strong sales of The Amazing Spider-Man 2. Much of that growth was fueled by Destiny, Heroes of the Storm and Hearthstone, which now have 70 million registered players combined. The three titles have generated over $1.25 billion in non-GAAP revenues to date.

Activision investors receive a 0.6% dividend. The Cowen price target for the stock is $44. The Thomson/First Call consensus target is $41.46. The stock closed Tuesday at $38.57.

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Electronic Arts

This company is a leading video game developer that should benefit from not only the continuing rise in new console sales, but the rising trend of mobile gaming. Electronic Arts Inc. (NASDAQ: EA) 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, which is very well known for their EA sports games like Madden Football, has made the move into mobile play by adapting many of the top franchise titles, which have been popular for years, into the mobile arena. The company reported solid third-quarter earnings and raised its guidance for Star Wars Battlefront to 13 million units. Many analysts feel that is a very beatable number. Cowen agrees and continues to expect Star Wars to sell at or slightly above the levels embedded in the company’s management’s fiscal year 2016 guidance.

Cowen also noted that Madden NFL 16 placed two SKU’s in the top 20 over the three-day Black Friday weekend. This came without the aggressive discounting that the company has offered over the past four years.

The Cowen price target is $79, and the consensus target is $82.29. The stock closed Tuesday at $68.63.

Take-Two Interactive Software

This is another top video game producer, and it has cashed in with some super-hot titles. Take-Two Interactive Software Inc. (NASDAQ: TTWO) offers its products under labels including 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 company posted very solid second-quarter fiscal 2016 numbers, and this is another stock that remains a large hedge fund favorite. In fact going into the fourth calendar quarter of 2015, 35 hedge funds had positions in the company.

The Cowen target is $36, and the consensus figure is at $37.94. The stock closed trading on Tuesday at $35.99.

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The video game industry is huge, and aggressive investors should carve out a place in their portfolios for a position. Remember, it’s not just kids and teenagers that are into gaming. Millennials and older players are everywhere. Plus, the more advanced the technology, the cooler that games, and that keeps players coming back for more.

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