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This Industry is on Fire in the “New Normal” – And It’s Not Too Late to Get In

By Matt McCallMay 13, 2020


As many states and countries start to reopen businesses for the first time in months, we’re all aware that things aren’t going to be the way they were before. In fact, a lot of people are referring to life after COVID-19 as the “new normal.”

That’s a reasonable way to look at it. There’s no question our everyday lives will be different in many ways.

But that isn’t always a bad thing. And it’s why I’m looking at what life will be like in the future in a very positive way.

History shows that a crisis often accelerates the inevitable. And since we were already on unstoppable paths to game-changing breakthroughs, it now looks as if we’ll get there sooner.

It was always inevitable that the fifth generation of wireless technology – 5G – would spread around the globe in the Roaring 2020s.

It was inevitable that telemedicine would become the future of healthcare visits.

It was inevitable that blockchain would be the basis for technological innovation.

The COVID-19 pandemic hasn’t stopped these and a dozen other hypergrowth trends. It has only accelerated them. And what excites me even more about the new normal future is that we’ve been covering these mega-trends here in MoneyWire for some time… and they’re already in our portfolios.

Here’s what I’m talking about…

One investment trend that has really shown strength in the face of the crisis is gaming – specifically eSports. The Wedbush ETFMG Video Game Tech ETF (GAMR) is up 11% so far in 2020 while the S&P 500 is down 12.7%.

One of the holdings in the ETF – and a stock that’s sitting on 60%+ profits in our Investment Opportunities portfolio – is having an even better year. I’m talking about Tencent Holdings (TCEHY), a Chinese tech giant that’s a world leader in gaming. The stock is up a very impressive 20% this year.

Tencent reported earnings before the bell today that sent shares nicely higher – up as much as 6% – to its best level in more than two years. Not many other stocks can match that right now. The company is worth nearly $560 billion and within 5% of its January 2018 all-time high. I believe it’s only a matter of time before Tencent joins the $1 trillion club.

Management said today that soaring demand for video games led to the strong first quarter. The online gaming division increased sales by 31% over the same period last year. Online ad revenue, which has been an issue for some of Tencent’s peers, was also impressive – up 32% year-over-year. Drilling down even further, social and other advertising sales gained 47%.

Overall, Tencent increased the top line by 26% over the first quarter of 2019… all in the face of one of the worst pandemics to hit the world in decades!

Even before COVID-19, eSports was one of our top investment themes. The industry’s growth was well underway… and its audience was already booming.

And now, eSports is growing faster than ever. With all professional and collegiate sports on hold for now, it is an obvious choice for enthusiasts to turn to the world of online entertainment.

If anything, the crisis has only accelerated the push of this new sporting outlet into the mainstream.

Just a few years ago, the eSports industry had a very small audience. By 2018 it had the eyes of 395 million people, and that number is expected to increase to 646 million people by 2023. This will lead to a big surge in related revenue, with sales expected to more than double in just five years. That’s incredible growth in a relatively short timeframe.

There are several ways to play the continued boom in gaming and eSports – everything from the console makers to the video game developers to the accessory makers will benefit from this red-hot trend. I’ve mentioned a few through the years, like Tencent, and we have a few other stocks in our portfolio that are in great positions.

The eSports industry is still in its early stages, but a fire is being lit under it right now as we stay at home and adjust our patterns to cope with the new normal. This is the beginning of what I expect to be a massive wealth-creating mega-trend in the years ahead.

A dozen or more other trends are now in similar situations, and we will continue to talk about them in the coming weeks and months here in MoneyWire and my investment research services. And as always, the key with all of them is getting in early. That’s how you make those life-changing profits.

Matt McCall’s MoneyLine Podcast

Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt talks about the latest jobs numbers and when they mean for investors. There are small glimmers of hope in the market, including the Nasdaq, which is up this year despite the current environment. And cryptocurrencies are an asset class you should be paying very close attention to right now. Things may look grim, but Matt is here to fill you in on all the investment opportunities that can help protect you and your family.

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