Thematic investing, such as allocating gaming stocks, is an excellent way to tap into concentrated systematic returns, allowing for excess return potential. Moreover, the gaming industry is forecasted to grow by 10.17% until 2029, consolidating its excess return prospects.
Considering the above, I decided to look for three stellar gaming stocks that might double in value by 2026. My search emphasized market positioning, fundamental aspects, valuation outlook and technical analysis. In addition, I considered event-driven factors wherever possible.
Although lucrative, gaming stocks can be risky. Therefore, I can’t guarantee positively skewed returns. Moreover, gaming stocks are cyclical, meaning their downside capture can be significant. Nevertheless, I believe these three gaming stocks will double in value by 2026.
Take-Two Interactive (TTWO)
Take-Two Interactive (NASDAQ:TTWO) recently received a “top pick” tag from Jefferies (NYSE:JEF). Although this is an isolated event, I think investors can read into it, as there is a reasonable basis for a bullish scenario.
For those unaware, Take-Two Interactive is the creator of Grand Theft Auto. As such, the pending release of GTA VI presents a comprehensive revenue pipeline to build on the firm’s existing revenue base, which settled at $1.4 billion in the first quarter.
Some might be worried about Take-Two’s bottom line as it is running at a loss. However, it seems like blitzscaling is its priority at the moment. Thus, I firmly believe future shareholder value is in the offing. Besides, TTWO stock’s price-to-sales ratio of 4.82x suggests the stock is grossly undervalued, especially considering Take-Two Interactive’s five-year compound annual growth rate of 14.92%.
TTWO stock has shed nearly 10% of its market value in the past six months. I’d say it’s a suitable time to buy the dip!
Roblox (RBLX)
Macquarie initiated coverage of RBLX (NYSE:RBLX) stock last month, assigning an outperform rating to the asset. Like Jefferies’ opinion of TTWO stock, Macquarie’s outlook on Roblox is isolated but telling.
Apart from its support from Wall Street, I added Roblox to this list as the company is intact with modern gaming, which includes features such as Metaverse exposure, virtual reality and interactive gameplay. Although Roblox has delivered mixed results during its tenure, its long-term prospects seem compelling. For example, the firm has a five-year compound annual growth rate of 53.83%, illustrating its secular prospects. Moreover, Roblox’s succinct product sequencing and early-to-market status allow additional scale, which I’m excited about.
As with many gaming stocks, Roblox is operating at a net loss. However, its focus is likely on market share expansion. As such, I won’t be surprised if its future shareholder value is best-in-class. Sure, competition in the gaming space is heating up, but I back Roblox to come out on top.
Lastly, RBLX stock is trading above its 10-, 50-, 100- and 200-day moving averages after surging by more than 10% in the past month. RBLX stock’s spike echoes a rebound, likely resulting in a momentum trend if the market prices the variables above.
I’m bullish here, folks!
Electronic Arts (EA)
Electronic Arts (NASDAQ:EA) is a household name that rarely needs an introduction. I added EA stock to the list as an option for those seeking a stable stock with consistent returns. Like TTWO stock, EA recently earned a bullish rating from Jefferies based on its “unrivaled scale” in sports gaming. The event adds optimism to the stock’s outlook; however, I see additional factors that could come into play in the next 18 months.
The fundamental driving forces behind EA are apparent. Firstly, at the back end of last year, sources stated that EA was working on its largest-ever pipeline of gaming projects. One of its pipeline projects, College Football 25, was released last week, adding to its revenue mix. Furthermore, EA’s non-U.S. sales amount to 58%, showing a global presence, which I deem favorable as it phases out cyclicality risk.
The abovementioned variables will probably lead to scintillating growth in the coming years and provide investors with lucrative returns, combined with the firm’s existing financial prowess. An example of EA’s current financial performance is its Return on Common Equity ratio of 17.20%, which echoes best-in-class shareholder value.
Lastly, EA stock looks good from a capital markets point of view. For instance, EA stock has a forward price-to-earnings ratio of 19.08x, which I deem low for a growth stock. Additionally, EA stock has a Put/Call ratio of 0.76, illustrating optimism from options traders.
On the date of publication, Steve Booyens did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.