Canada has a relatively small gaming industry, with only a handful of companies reaching the small-cap mark. It’s also an underrepresented segment of our tech sector since no major publicly traded gaming studios or game-oriented tech stocks exist in Canada.
It’s a good idea for Canadians looking to invest in gaming stocks to cast a wider net, both geographically and when it comes to the interpretation of gaming companies/stocks.
A hospitality and gaming company
Alberta-based Gamehost (TSX:GH) is among the largest gaming businesses in the country. It has five properties in its portfolio; three of them are in the Grande Prairie. All three casinos the company owns are in different Albertan cities, giving it a decent geographic reach. The hospitality properties (dedicated or combined) complement this business model.
Dividends are the more reliable part of this stock’s return potential, but the stock has also offered quite modest capital appreciation in the last few years. It rose by about 16% in the last 12 months. The stock is also quite attractively valued, which adds to its appeal, along with its 5.1% dividend yield.
A gaming hardware stock
Nvidia (NASDAQ:NVDA) is a gaming stock of a completely different breed that’s currently riding the bullish momentum of market segments other than gaming. It’s one of the latest Graphical Processing Units (GPUs) in the world, which made it a well-known name in the global computer gaming industry.
However, when the market realized that GPU chips are far better for crypto mining than conventional CPU-based computing power, the demand for Nvidia’s hardware rose for a different reason.
Even though that market has slowed down (if not completely dried out), there is a new market avenue opening up for Nvidia’s products, i.e., computing power for artificial intelligence models. So, even though a significant portion of the products it makes in any given year goes to gaming consumers, that’s not what has made it a trillion-dollar company (US$1.7 trillion, to be exact).
A toymaker
Spin Master (TSX:TOY) is one of the largest toymakers in Canada and has a massive global presence, with its toys being distributed to over a hundred countries. It also has a portfolio in digital games, with five individual products, including a game studio, a digital toy creator, and a gamified educational platform. In the last quarter’s results, this segment made up over 6% of the company’s total revenue.
The target market of Spin Master is different from what the other casino-oriented gaming stocks appeal to, and it also has its own set of challenges and competition. This can ensure that its performance patterns are different from conventional gaming stocks.
The stock has experienced a solid post-pandemic rise, but after reaching the top and hovering there for a couple of years, the stock has slumped about 29% and has remained stagnant in that position for at least a year. It offers dividends as well, but the yield is too low.
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Foolish takeaway
The three gaming stocks offer three different types of exposure to the diversified gaming industry, and two of them are being influenced by factors that are not gaming-related. However, all three are promising companies you may consider buying in February or at least start tracking for the identification of bear or bull market phases.
