The coronavirus pandemic has become a big money churner for the video gaming industry. After all, the virus is mostly compelling people to stay at home, with individuals craving for entertainment spending more time on computers and video games.

 

Notably, video games have now become one of the most affordable entertainment options for those at home, with the gaming market expected to see a compound annual growth rate (CAGR) of 12.9% from 2020 to 2027, per Grand View Research. 

 

By the way, disposable income in the United States, in the near future, is expected to improve on government aid. Thus, millennial and centennial generations are widely expected to spend more of their disposable income on things they love, like video games. 

 

Several companies, thus, are expected to gain from this rare entertainment category. Here’re three of them that are worth a watch in August.

 

First in the list is Activision Blizzard, Inc . With millions of people turning to digital entertainment amid the stay-at-home trend, Activision Blizzard saw its shares jump 72% year to date. In fact, the videogame publisher recently topped Wall Street expectations for the second quarter.

 

On Aug 4, the company reported second-quarter net income of $580 million, or 75 cents per share, more than $328 million  or 43 cents a share, a year-ago. At the same time, revenues increased to $1.93 billion from $1.4 billion in the year-ago quarter. Activision Blizzard’s net bookings also rose to $2.08 billion from $1.21 billion in the year-ago period. Analysts, in the meantime, were expecting earnings of 69 cents a share on revenues of $1.7 billion and bookings of $1.69 billion.

 

What’s more, Bobby Kotick, Activision Blizzard’s chief executive, confirmed that “the initiatives that drove our growth for the first half of the year should also provide the foundation for long-term growth.” Activision Blizzard now expects third-quarter earnings to come in at 75 cents on revenues of $1.8 billion versus analysts’ expectations of earnings of 41 cents on revenues of $1.4 billion. 

 

Activision Blizzard’s top line is expected to benefit from an expanding user base of Call of Duty: Modern Warfare, Hearthstone, World of Warcraft and King’s Candy Crush Saga, particularly owing to people mostly opting to stay-at-home amid the pandemic. Needless to say, Activision Blizzard’s innovative gaming pipeline, strength in digital business and foray into e-sports do bode well for long-term growth.

 

Activision Blizzard currently has a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its current-year earnings has moved up 1.1% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 25% and 24%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

The second stock is TakeTwo Interactive Software, Inc. (TTWO Quick QuoteTTWO - Free Report) . The company recently reported fiscal first-quarter results, with net income of $88.5 million or 77 cents a share, compared with net income of $71.7 million or 62 cents a share a year ago. Revenues also surged 54% to $831.3 million from $540.5 million in the year-ago quarter. 

 

Widespread lockdowns boosted TakeTwo Interactive’s performance. And with the stay-at-home trend expected to continue in the near future, TakeTwo Interactive raised its fiscal year adjusted sales forecast. After all, demand for its popular videogame franchises Grand Theft Auto and NBA 2K is likely to pick up.  

 

Nonetheless, the company projected revenues at a range of $2.80 billion to $2.90 billion for its year ending March 2021 versus $2.55 billion to $2.65 billion earlier.

 

TakeTwo Interactive currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has climbed 0.8% over the past 60 days. The company’s expected earnings growth rate for the next year is 50%. Shares of TakeTwo Interactive have gained a superb 34% so far this year compared with the broader S&P 500’s meager 1% year-to-date increase.

 

The third stock is Electronic Arts Inc. (EA Quick QuoteEA - Free Report) . Recently, the videogame publisher’s fiscal first-quarter earnings topped Wall Street expectations amid COVID-19 shutdowns. For the quarter ended June 2020, the company reported earnings of $1.25 a share, ahead of estimates of $1.02. Revenues of $1.46 billion also topped estimates of $1.05 billion.

 

Electronic Arts notched a solid quarter, as playing videogames was one of the few leisure activities that people at homes took to. And as such trends are expected continue with fresh spike in coronavirus cases, Electronic Arts’ business will certainly prosper. Blake Jorgensen, who is both chief operating officer and chief financial officer said, “our Stay Home, Play Together initiatives have been a strong tailwind for the business, as players look for safe and social entertainment in these difficult times.”

 

Electronic Arts has a strong content portfolio of blockbuster games like FIFA, Madden, Star Wars, Battlefield and Anthem that will surely make the most of people’s confinement to their homes. Electronic Arts currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 4.2% over the past 60 days. The company’s expected earnings growth rate for the next year is 10.6%. Electronic Arts saw its stock gain more than 30% year to date.

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

 

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.