5 best Canadian game stocks for millennials to buy

Highlights

• The closure of some revenue-generating properties impacted the business operations of one of the companies listed below.
• One of the below-mentioned companies. announced the completion of its U.S. initial public offering (IPO) and raised total proceeds of US$ 186.3 million in the latest quarter.
• The highest one-year stock return posted by these companies was close to 609 per cent.

The S&P/TSX Capped Communication Service Index posted a Year-to-Date (YTD) return of 20.61 per cent, and the S&P/TSX Composite Index posted a YTD return of 19.35 per cent. Whereas one of these gaming stocks posted a YTD return of 202 per cent. The gaming stock outperformed both these indexes within this time frame.

Another gaming stock mentioned in this article posted revenue growth of 360 per cent Year-over-Year (YoY) in the latest quarter. On the backdrop of a global lockdown and closure of some of the gaming properties and assets, these gaming stocks delivered a better quarter.

On this note, let us explore some of the gaming stocks for millennials.

1. Engine Media Holdings Inc. (TSXV:GAME)

The media and gaming company organizes and hosts events and tournaments like esports racing and esports tournament hosting. Along with this, Engine Media Holdings also has a media and advertising arm.

The interactive media company held a market cap of C$ 124.93 million, posted an earnings per share (EPS) of 2.81, and a price-to-book (P/B) ratio of 4.83 on September 8, 2021.

Engine Media in the third quarter of the fiscal year 2021 posted revenue of US$ 9.6 million, up 360 per cent YoY and 14.6 per cent Quarter-on-Quarter (QoQ). Its net income from continuing operations was US$ 6.2 million in Q3 FY21.

The senior management of Engine Media commented that it collaborated with Ric Flair, a wrestling legend, to host a pre-slam Livestream inaugural session.

The stock price of Engine Media dipped by close to 28 per cent in the past year and closed at C$ 8.07 on September 7, 2021.

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2. Great Canadian Gaming Corporation (TSX: GC)

This company with a C$ 2.52 billion market cap on September 8 is engaged in the business of entertainment and gambling. The company operates in Canada, offering horse racing, table games, and other community games.

The company's stock price reached its 52-week high of C$ 45.03 on April 1, 2021, and traded roughly two per cent below this level on September 7, 2021. On the same day, it closed at C$ 43.91.

The stock price expanded in one year by 68 per cent but only returned close to 16 per cent in the last nine months.

Properties were temporarily closed during the pandemic except for specific gaming properties located in Ontario and the Atlantic. The closure of some revenue-generating properties impacted the company's operations, as per the latest quarterly report.

The revenue of Great Canadian Gaming was C$ 70.7 million, and adjusted EBITDA was C$ 41.8 million in Q2 FY21. The company held a price-to-book (P/B) ratio of 5.48 on September 8.

Also Read: 4 EPIC Canadian gaming stocks to blow your mind

3. Gamehost Inc. (TSX: GH)

Gamehost is a C$ 186.75 million market cap (September 8) company offering casino services, lotteries, and other games. The company also has a hotel business and a food and beverage division operating in Alberta, Canada.

On the valuation metrics, this gaming company held an EPS of 0.14, return on equity (ROE) 3.33 percent, return on assets (ROA) was 1.97 per cent.

Gamehost posted operating revenue of C$ 2.9 million in Q2 FY21, up from C$ 1.8 million in Q2 FY20. Its EBITDA was C$ 0.8 million in Q2 FY21, moving from an EBITDA loss a year ago.

The stock price of the gaming scrip closed at C$ 8.11 on September 7, and the one-year stock return was close to 41 per cent.

1-year chart of stock performance, volume and moving average exponential of Gamehost Inc. (Source: Refinitiv) 

The above stock price depicts the one-year chart of Gamehost Inc. The price gained from C$ 4.23 apiece in November 2020 reached C$ 8.11 on September 7, 2021. It appears to be an uptrend forming series of highs and lows.

4. Score Media and Gaming Inc. (TSX:SCR)

Score Media is a gaming and interactive media company engaging with its fanbase through its betting products and other digital media services. The P/B ratio of the company was 9.77 and it posted a debt-to-equity (D/E) ratio of 1.8 (at the time of writing).

On a YTD basis, the stock price of Score Media climbed up by 202 per cent and skyrocketed close to 609 per cent over the past year. The stock price of the company closed at C$ 45.37 on September 7.

In Q3 FY21, the total revenue of the company was C$ 6.4 million. The media revenue grew 270 per cent YoY, which offset the negative gaming revenue in the same quarter.

The company announced the completion of its U.S. initial public offering (IPO) and raised total proceeds of US$ 186.3 million in Q3 FY21.

Also Read: 2 Gaming & Esports Stocks To Buy As Canada Debates On Betting Policy

5. Enthusiast Gaming Holdings Inc. (TSX:EGLX)

This gaming company is in the process of building a platform for its fanbase spread across the world. The platform shall enable the fans to play video games and esports and it hopes to reach over 300 million fans each month.

Enthusiast Gaming held 126.35 million outstanding shares and a market cap of C$ 687.33 million on September 8. The company also posted a P/B ratio of 2.87 on this day.

Over the past year, the stock price of Enthusiast Gaming climbed up 232 per cent roughly. However, on a quarter-to-date (QTD) basis, it dipped by 26 per cent. The stock price closed at C$ 5.44 on September 8.

As per the management’s commentary, Enthusiast Gaming acquired Addicting Games, Inc., a casual gaming company. This acquisition is believed to expand the fanbase of Enthusiast Gaming and venture into the casual gaming segment.

Bottom line:

The reopening of many venues may come as an advantage to revamp strategies and post better revenue and profitability ratios.