Growing up, I was never big on video games.
Of course, I would always beg my mom to let me to go the local arcade, but that was more for social reasons than for playing games.
As I got older, I got more interested in video games, but more as a way to connect with others. I’d play football or soccer games in my dorm room with friends for hours.
I find myself doing the same thing now, only with my kids.
We play combat games (I still can’t get my thumbs to move that fast) together all the time.
But what started as a trip to the arcade with rolls of quarters has turned into a multibillion-dollar industry.
Using Money & Markets Chief Investment Strategist Adam O’Dell’s Green Zone Ratings system, a great company is leading the way in the video game industry. It’s one that could give investors like you and me more than 25% gains in the next year.
More about that shortly. But first, I want to show you where the gaming industry will be in the next year.
Video Game Market Value to Surge
Before the 1990s, the only way to experience video games was to take a roll of quarters to the local arcade and play for hours.
Then came video game consoles — putting the power of the arcade in our homes.
Since then, the video game industry has become a multibillion-dollar market … and it’s expected to grow even more:
Global Video Game Market to Jump 162% by 2021
With millions around the world locked down due to the coronavirus pandemic, video games became an outlet for social interaction.
Add in the rise in e-sports and streamers showcasing their video game prowess, and the industry will keep growing in popularity.
Now, I’ll share the video game stock that I’m convinced will provide you with double-digit gains in a year.
Don’t Look Past This Video Game Stock
We’ve uncovered a company heavily invested in the video game industry. Using Adam’s Green Zone Ratings system, we think it can produce more than 25% gains in short order.
It’s a company with strong growth potential, and the stock is already in an upward trend. You see, we like stocks already showing strong momentum because it takes the guesswork out of figuring out when a stock will rise.
Sony Corp. (NYSE: SNE) is a Japanese conglomerate. With its PlayStation gaming console, it’s a leader in the video-game industry, and that makes it a top video game stock.
It’s also diversified in the music entertainment business, video game publishing, and film and television production.
Its recent quarterly earnings showed a 57% jump in earnings per share on a 25% increase in quarterly sales year over year.
A big part of that jump was because of increased demand in video games due to the coronavirus pandemic. Sony said it expects its games and network services segment — which includes video game console, games and subscription sales — to jump 26% from 2019.
Sony’s video game sales climbed 82% year-on-year, with 74% of those sales coming from digital downloads.
Sony Corp. Jumps 88% Off March Low
Overall, Sony Corp. earns an overall ranking of 97 on Adam’s Green Zone Ratings system.
It ranks the highest in volatility, growth, momentum and quality.
Here’s a deeper dive into the company:
- Volatility — Sony earns a ranking of 98 on volatility — only 2% of all other stocks rated are better. Two factors prove its low volatility: a beta of 0.79 (low-volatility stocks have a beta lower than 1) — plus strong risk-adjusted returns.
- Growth — The company scores a 91 on growth. It has a 3-year earnings-per-share growth rate of more than 100% and trailing net income of more than $6.1 billion.
- Momentum — Adam and I like stocks that are already in an upward trend. Sony ranks a 90 on momentum. It has a positive directional movement indicator coupled with strong trailing returns.
- Quality — Sony ranks an 83 on quality with returns on assets, equity and investments all better than the industry averages. It also has a 2% operating margin compared to a minus-2.8% margin for the industry. What’s more is its operating cash flow is over $14.5 billion.
What You Should Do With Sony Corp. Stock
Even amid a recession and the coronavirus pandemic, people continued to invest in video games and consoles.
The PlayStation 4 remains one of the best-selling video game consoles on the market, owning an astonishing 63% of the console market through July 2020.
PlayStation 4 Gains in Market Share
The company plans to release its latest console — the PlayStation 5 — during the 2020 holiday season, which will give Sony an added boost to sales at the end of the year.
Analysts with Oppenheimer recently raised their price target for Sony to $100 per share — a 22% gain from its current price.
With the release of the PlayStation 5, I think sales and earnings can be even stronger for Sony.
The bottom line: Sony’s sales have benefited from the coronavirus. The PlayStation 5 could give it a 1-2 punch, making it a video game stock to buy now for the potential of double-digit gains in 12 months.
Pro tip: Sony is a good buy today. But for another play on the gaming trend, Adam’s Green Zone Ratings system recently identified a stock that’s capitalizing on e-sports betting — plus the rising popularity of digital payment systems. This company scored a 98.4 overall — with a Quality rating of 85 and a Growth rating of 92.
Adam calls this overlooked, undervalued digital payments company “the frugal man’s PayPal.” The stock trades for around $20 today. But he lays out in the August issue of Green Zone Fortunes how he thinks the share price could hit $59 easily in the years ahead.
To get access to this stock while it’s still trading under Adam’s buy-up-to price … and to get his hand-picked top Green Zone-ranked stock every month … for just $0.13 a day … click here, or on the image below, now!
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.