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Video Game Stocks Heat Up Just in Time for the Holidays: GTA, Xbox, PS4

Lee Jackson

The excitement around the staggering dollars that hot new video releases bring in is soon to be joined by hot new video gaming platforms. Rumors have circulated around the devices, where the Sony Corp. (SNE) PS4 seems to rise above the Microsoft Corp. (MSFT) Xbox One in resolution, while each contain exciting new bells and whistles for gamers.

The PS4 will arrive in the United States and Canada on Nov. 15, and Europe on Nov. 29. The PlayStation 4 will support Blu-ray and DVD capabilities, cloud storage, cross-game chat, live streaming and Bluetooth 2.1. Under the hood it will pack 8GB of RAM and 500GB of internal storage. Microsoft's Xbox One will come with a Kinect 2.0, which costs $150 when sold separately. The official Xbox One release date is mid-November for the United States, United Kingdom and 19 other territories, right at the start of the Christmas season. Additionally, Sony is offering up the PlayStation 4 as a bundle package for $499, the same price as the Xbox One. Both of the gaming platforms are hotly anticipated and should be huge holiday sellers.

The new platforms are perfectly timed for the top video game companies releasing new product for the fall and the holiday shopping season. In a new research report, the video gaming analysts at Cowen highlight the top video game stocks to buy. With hot titles either out or soon to hit the market, these stocks could be poised to move significantly higher.

Take-Two Interactive Software Inc. (TTWO) is the proud owner of the hugely popular and successful Grand Theft Auto franchise. Guinness World Records confirmed that the launch of Grand Theft Auto V broke six new records, including the highest revenue generated by an entertainment product in 24 hours and the fastest entertainment property to gross $1 billion. The Thomson/First Call price target for the stock is $21. Take-Two closed Tuesday at $17.68.

Activision Blizzard Inc. (ATVI) is the company with the popular Call of Duty franchise. It is also well-known for the Diablo games that are huge with teenage gamers. The company announced Tuesday that Rovio Entertainment and Lucasfilm, in association with Activision Publishing, a wholly owned subsidiary of Activision Blizzard, launched Angry Birds Star Wars for home and hand-held video game systems. Based on Rovio's wildly popular, action-strategy mobile game, Angry Birds Star Wars brings the interstellar struggle between the ragtag Rebel Birds and dastardly Imperial Pigs to new audiences. The consensus price target for the stock is $21. Investors are paid a small 1.1% dividend.

Electronic Arts Inc. (EA) is the old-timer of the crew and had issues over the past couple of years. Earnings came out after the close Tuesday and were strong. The stock has fought its way back to prominence with the popular Battlefield series. There is little question Battlefield will be a strong competitor this holiday season, the question is how strong. The last version of the game, released in 2011, pre-sold 3 million units, certifying it a hit. EA shipped 10 million units within the first week on the market. Medal of Honor is also a top-selling title that is big with the younger gaming set. The consensus price target for the stock is $28. The stock closed Tuesday at $24.24.

Zynga Inc. (ZNGA) may provide aggressive investors a top video gaming play. The company surprised Wall Street last week when it announced a loss of $68,000 and a decrease in revenue of 12% from the prior quarter. For two years, the company has struggled with the effects of missing the smartphone revolution. However, in one quarter, Zynga has had major changes in its cost structure, and it is working to improve long-term revenue using mobile gaming as a catalyst. The Wall Street consensus target for the stock is $4. Zynga closed Tuesday at $3.68.

The other sector that benefits from the explosion in video games and the gaming consoles is the retail sector. The big-box retailers are just as excited about the new titles and consoles as the gaming audience. Expect Best Buy Co. Inc. (BBY), Target Corp. (TGT) and Wal-Mart Stores Inc. (WMT) to all get their fair share. Amazon.com Inc. (AMZN) also looks to benefit big this holiday season.

The gaming public is always thirsty for new titles and a new way to play them. In addition, new gamers are constantly picking up the torch and adding to the huge numbers around the world. This trend is not expected to slow down anytime soon.