BABA: 3 “In Home” Entertainment Stocks You Can’t Ignore

Day by day our worlds are closing in thanks to the Coronavirus. The pull is to go home…and stay home.

Right now our schools and companies are saying it will only be for a month. However, the more research I do, the more I suspect that is wishful thinking and likely this at home trend will continue longer. Thus it is incumbent upon us as investors to look high and low for all the stocks that benefit the most from this trend.

The key is to make sure that they are still attractive even when our lives go back to normal. I think you will find that is the case with these 3 “in home” entertainment stocks: Alibaba Holdings (BABA), Activision (ATVI), and Zynga (ZNGA). Let’s review the merits of each below.

Alibaba Group Holding (BABA)

In all honesty, BABA was my favorite stock before the Coronavirus came on the scene. That is why I bought shares for the Reitmeister Total Return portfolio in the midst of the China Trade war at a healthy discount. Then after rising to a high of $230 BABA shares are on discount again thanks to this latest crises.

As you know, the Chinese and others around the globe are hesitant to shop in traditional brick-and-mortar stores as a result of the coronavirus. BABA is poised to benefit from this phenomenon. The company’s Chinese delivery services have quickly returned to their pre-pandemic levels. Though it might be hard to believe for panicked consumers in the United States and Europe, BABA’s delivery operations are now fully staffed.

The company’s rapid return to “business as usual” is largely attributable to the Draconian yet seemingly effective measures taken by China’s totalitarian leadership. If you believe the coronavirus numbers reported by the Chinese government, it appears as though they have the virus beaten. I for one don’t believe the #s at all. Just like how the government fakes their GDP and other economic figures. Thus, I expect there to more folks enjoying BABA service at home in China for quite some time more.

Look for BABA sales to spike as a result of consumer’s hesitance to frequent malls, shopping plazas, supermarkets and public spaces. Furthermore, BABA provides cloud computing services through its Alibaba, Tmall and Taobao online platforms. BABA is also dipping its toes in the digital media waters. All signs point to BABA continuing to diversify its services in the digital realm and beyond as the world rapidly transitions toward a tech-centric society. BABA’s digital media and entertainment is still a loss maker yet improving as time progresses. Look for BABA to expand its footprint in this space and capture that much more market share as more people turn to in home screens for entertainment as well as work.

2024 STOCK MARKET OUTLOOK

Even with the bear market at our doorstep I expect BABA to make it to $250 this year. And $300 not out of the question if this ends up being a short bear market with stocks on the march in the 2^nd half of the year.

(BABA is one of only 5 stocks currently in the Reitmeister Total Return portfolio)

Activision Blizzard (ATVI)

Ask anyone who knows anything about video games and you will likely hear all about how Activision Blizzard makes some of the industry’s most captivating content. ATVI games are bound to sell that much better now that the majority of people will primarily remain indoors in fear of exposure to COVID-19. Take a look at ATVI’s 6-month and 1-year charts and you will find this is a successful business that does not need a pandemic to rake in the cash.

ATVI’s most popular titles include:

Call of Duty: Modern Warfare
Skylanders
Spyro
Crash Team Racing
Destiny
Sekiro
King’s Quest

It is important to note the video game-obsessed millennial age cohort is the largest in all of the United States. Demographic experts are well aware of the fact that millennials are somewhat brainwashed to spend a considerable amount of their discretionary income on gaming. According to Neilsen, members of the massive millennial age group spend a whopping $112 on video games every single month.

Add it all up and you realize why ATVI shares are breakeven this year with so many other stocks down 20%+. But that is just in the short run. This is a great growth story which explains the 164% gain for shares the last 5 years. No, past performance is not a guarantee of future results, but right now trends are quite positive for shares and should continue to outperform in the weeks, months and years ahead.

Zynga (ZNGA)

This may be one of the last stocks in the alphabet, but ZNGA should be one of the first you run to during this coronavirus crisis. Everything gaming-related is about to receive a considerable boost thanks to the society-wide withdrawal from outdoor, social-oriented activities.

Perhaps the only silver lining to the coronavirus pandemic is those invested in gaming stocks such as ZNGA stand to benefit. However, even if the coronavirus does not turn out to be a once-in-a-century plague, ZNGA still has a solid business model as one of the industry’s leading game developers and publishers.

Zynga’s top titles include:

FarmVille Game of Thrones
Slots Casino
Dawn of Titans
Words With Friends
Crazy Cake Swap
Zynga Poker
Bounzy
1010!
Empires & Puzzles: RPG Quest

ZNGA is up about 7% on the year which stands in strong contrast to most every other stock that is painted red. This outperformance is why shares are boasting a POWR Rating of B (Buy) with

Want more great stock picks? Then check out these additional resources:

3 More “Stay at Home” Stock Winners

All POWR Rating A (Strong Buy) Stocks

Reitmeister Total Return portfolio

BABA shares closed at $194.00 on Friday, up $8.90 (+4.81%). Year-to-date, BABA has declined -8.53%, versus a -16.32% rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...