GameStop (), the brick-and-mortar video games and gaming hardware seller, has struggled in recent years in the face of a retail industry that is increasingly moving online and a new delivery model for gaming content is leading to more of it being purchased and downloaded directly through internet-connected consoles. GameStop stock certainly has some attractive aspects, including a dividend yield of more than 6% and a price to earnings ratio of just 6. Still, there's a reason for this low valuation. The company expects to see same-store sales continue their decline, and fall by as much as 7% in its third quarter.
Video game fans continue to want the newest technology and on-demand content, so the long-term gains in this industry are likely to come from the content creators and actual hardware innovators. Given that insight, here are three stocks in the industry that look better than GameStop today.
| Company | Market Cap | P/E (TTM) | Gaming Industry Growth Thesis |
|---|---|---|---|
| Activision Blizzard () | $29 billion | 33 | Top content and online gaming growth, strong sales growth |
| Electronic Arts () | $23 billion | 19 | Less impressive sales growth, but much cheaper than Activision |
| NVIDIA () | $45 billion | 43 | Top chipmaker powering gaming growth, with diversified revenue streams |
Activision Blizzard
After an incredible start to 2016, Activision Blizzard shares lost about 10% of their value following the company's Q3 earnings report, which showed an incredible 58% jump in revenue year over year, but which also featured a lighter-than-expected Q4 forecast -- even though it was revised up. This small dip could be a great chance to buy into this growth stock at a discount.
During the third quarter, Activision posted earnings of $0.26 per share, up 53% year over year. The growth in sales and earnings was helped by a 50% increase in monthly active users, and great reaction to new releases like...
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