Over the past three months, the novel coronavirus outbreak has put cities under lockdowns and confined people to their homes. With schools, colleges and offices shut down, people are looking for sources of entertainment to keep them engaged. The online gaming space driven by Internet and cloud technology connects gamers worldwide.

Evidently, on Mar 22, On Steam, one of the largest PC gaming platforms said that it has hit a new record with nearly 20.7 million players actively gaming or chatting on its platform at the same time. The recent development in online gambling practices is also helping the gaming industry boom.

Online Gaming in Vogue

Game streaming has been trending in the past few years. And with gaming platforms like Twitch that make the experience lifelike, the graph is likely to move northward in the future as well. As a proof, Twitch recently reported that its week-on-week engagement is growing with average concurrent viewers now more than 1.5 million.

In 2019, e-sports recorded rapid global growth with revenues exceeding $1 billion and more than 443 million audience across the globe. The majority of the fans were based in North America and China. And why not? Internet usage is relatively low in online gaming. However, downloading games can be bandwidth-heavy.

Moreover, due to the current quarantine and lockdowns, physical sports have been put off. Thus, several companies are now focusing on online gaming. Boxing for example has a huge fan base. With real-life fights postponed due to the virus outbreak, companies have turned to gaming to keep fans entertained.

The fights are being played using computer-versus-computer simulations, with greatest-ever heavyweights pitted against each other in a tournament series and streamed online. The first two contests were viewed by nearly half a million people from across the globe and put Electronic Arts Inc.’s (EA - Free Report) game Fight Night Champion in limelight.

Basketball is another popular sport in America. To counter the fall in real sporting events, the NBA 2K is hosting its first ever 3-on-3 tournament where players can participate online and grab the opportunity to win a prize pool of $25,000.

On the other hand, as traditional casinos remain closed due to lockdowns, many states are looking into legalizing online gambling, which could also curb the sharp decline in gaming tax revenues. So far, Nevada, New Jersey, Pennsylvania, Michigan, West Virginia and Delaware have legalized online gambling, with Nevada allowing only poker as online-casino game.

5 Stocks to Watch

With the coronavirus pandemic wreaking havoc, it seems that it may take weeks or even months for people to resume their normal life. Hence, we have shortlisted five gaming stocks that can benefit as people spend more time hooked on to their mobiles, personal computers, gaming consoles and joysticks due to home quarantine.

Our first choice is Electronic Arts known for its popular collections of sports, first-person shooter, action, role-playing, and simulation games like FIFA. The company’s expected earnings growth rate for the next quarter is more than 100% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of 67.4%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 0.2% upward over the past 60 days.

Electronic Arts carries a Zacks Rank #2 (Buy).

iGaming systems and digital platforms provider International Game Technology PLC (IGT - Free Report) , also makes it up to our list. The company is sure to benefit with its range of poker, bingo, and online casino table and slot games with rapid legalization of online gambling.

This Zacks Rank #3 (Hold) company’s expected earnings growth rate for the current quarter is 91.7% against the Zacks Gaming industry’s projected earnings decline of 1%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.8% upward over the past 30 days.

Next we have, Activision Blizzard, Inc. (ATVI - Free Report) , the maker of gamers’ favorite Call of Duty series. The company boasts a solid portfolio of content and services on video game consoles, personal computers and mobile devices.

This Zacks Rank #3 company’s expected earnings growth rate for the current quarter is 22.6% against the Zacks Toys - Games - Hobbies industry’s projected earnings decline of 22.8%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 0.4% upward over the past 30 days.

Zynga Inc. (ZNGA - Free Report) offers a series of games that can be played on mobile platforms, such as Apple iOS and Google's Android operating systems and also on social networking sites like Facebook.

This Zacks Rank #3 company’s expected earnings growth rate for the current quarter is more than 100% against the Zacks Gaming industry’s projected earnings decline of 1%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 9.5% upward over the past 30 days.

Lastly, we have,The Stars Group Inc. (TSG - Free Report) that offers an array of online real-money poker, casino and betting, play-money poker, and casino and sports prediction games. The company’s expected earnings growth rate for the current quarter is 18.4% against the Zacks Gaming industry’s projected earnings decline of 1%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 1.6% upward over the past 30 days.The Stars Group carries a Zacks Rank #3.