This Stock is a Must-Buy Now

Corsair Gaming (CRSR) stock was one of the biggest plays on the lockdown. It was a great time to be a computer hardware dealer, as many rushed for entertainment to fill their stay-at-home time.

It was also a great time to IPO. The Corsair IPO price started at $17 and shot up to $51, a 200% return for some investors.

If you missed that, don’t worry. This company is just getting started. Corsair is much more than a “stay at home” stock.

Sure, the lockdowns boosted Corsair to $23.8 million in profits after two years of consecutive net losses.

But the recent Corsair earnings report shows there is much more to this company.

On May 4, Corsair released its Q1 2021 results. And, quite frankly, it crushed it.

But the stock is still not priced in its fundamental success.

Here are a few highlights from Corsair’s Q1 earnings report and why this company still has much further to grow.

One of the Fastest-Growing Companies on the Planet

The report showed net revenue was $529 million, a 71.6% increase year over year. Corsair’s gamer and peripherals segment netted $353 million, a 51.9% increase year over year.

It also made $46.7 million in profits – in the same period last year, it made just $1.2 million. That’s 3,791% growth.

Annual profits were around $23 million for 2020. That means profits in the first quarter of 2021 were more than double what they were for the entire previous year.

Cash flows from operations rose from $2 million to $27.8 million as well. That is 1,290% growth.

Many might be tempted to think this was all residual from the lockdowns. After all, people were cooped up at home with little to do but stream games and movies.

However, with the trend we see on the horizon, nothing could be further from the truth.

Corsair Is More Than a Quarantine Stock

Corsair sells computer peripherals and gaming hardware. The California-based company focuses on a PC-gaming audience, popular for its keyboards, mice, speakers, USB drives, cooling systems, power supplies, and more.

It went public at just the right time in September 2020, while everyone was still clamoring for stay-at-home activities. The Corsair stock ticker, CRSR, could be found on the NASDAQ for $17. But the stock rose quickly in the ensuing months, reaching $51 by November, a 200% increase.

Corsair was valued at $2 billion on its IPO date and raised $119 million in the initial public offering. Since then, in less than a year, Corsair has added almost $1 billion to its market cap, now at $2.94 billion.

Of course, the circumstances surrounding COVID-19 played a large role in the hype around this stock. But in such a volatile time, it can be hard to differentiate real value from a fluke.

Fortunately, the earnings results cleared some of that up. Since the stock has fallen 37% to just $32, you can be more confident that Corsair has leveled off to a steady average.

The stock is up 124% from $14.25 to $32.06 since its IPO date. And from here on out, the Corsair stock price should be less volatile than in the IPO frenzy.

And the growth on the way will be based on real earnings results in addition to a massive demand increase for Corsair products.

Why Corsair Stock Is a Must-Buy Now

Because PC gamers are among Corsair’s biggest base, the company’s success hinges on a move toward PC gaming away from console gaming (Xbox, PlayStation, etc.).

Fortunately, this appears to be happening as companies like Google and Microsoft release their own subscription-based cloud gaming platforms. Cloud gaming can achieve an almost identical experience to consoles, without any exclusive hardware. It’s all streamed online, with many of the same games available.

Microsoft moving to cloud gaming is huge, since it has relied on the wildly successful Xbox console to carry its gaming segment. With Xbox games in the cloud, however, it caters to the same customers but on a subscription basis. That provides Microsoft with more opportunity for long-term revenue, since it’s not a one-time payment as with consoles.

That is happening across the board in the gaming industry. It’s why cloud gaming is expected to reach $15.2 billion in value by 2030. That’s a 406% growth target from about $3 billion today. But that’s not even the only industry pushing Corsair stock.

Professional gaming is growing in acceptance as a legitimate “sport.” Video games played competitively, called “esports,” are drawing hundreds of millions of viewers every year. Four hundred million tune into YouTube and Twitch worldwide on a regular basis just to watch others play games like Fortnite, StarCraft, and League of Legends.

The perception of your average “gamer” is changing drastically as we speak. What was once thought of as a fringe, almost antisocial hobby is growing into possibly the biggest global entertainment trend in existence.

Video games raked in $120 billion in revenue in 2019. That was 10 times the value brought in by the film industry when hits like Avengers and Star Wars were released.

Additionally, the average millennial gamer spends $112 per month on gaming.

A lot of that is money that could go toward Corsair’s PC products.

Ultimately, Corsair is poised to take over a large segment of a gaming industry being funneled into PCs. With cloud gaming and esports set for takeoff, expect this stock to double or more over the next decade.

Right now is a great opportunity to buy on a dip, as the high analyst target for Corsair is $55 for the year. That would represent a solid 71% bump from today’s price.

— Mike Stenger

Are These 10 Stocks Ready to Go Up? [sponsor]
Tom Gentile, commonly known as America’s #1 Pattern Trader, has just released the names of 10 stocks that he believes could go up between now and December 6. These stocks have increased in price virtually every time in the last 10 years during the same specific window of time. See the full list here.

Source: Money Morning