With the explosive growth of video games and livestreaming has come the need for better computer hardware. That’s where companies like Corsair Gaming (NASDAQ:CRSR) come in. In this episode of “The Gaming Show” on Motley Fool Live, recorded on Jan. 31, Motley Fool analysts Jon Quast and Clay Bruning, along with Fool.com contributor Jose Najarro, discuss if they see investment opportunities in the gaming equipment and accessories maker.
Jon Quast: One of the companies that I was thinking of here is a pure play in the PC hardware space, and that’s Corsair Gaming, CRSR is the ticker symbol there, trading under 16 times earnings, less than one times sales, down 58 percent from its high, is this a company worth looking at here, considering the trend in PC hardware? What do you guys think, worth putting on your watch list maybe?
Clay Bruning: Yeah. Absolutely. I think even though there’s probably been a bit of a pull forward here in the last couple of years with COVID and a lot of people stuck inside their houses for two years. Probably 2020 into first half of 2021, I think there was certainly a pull forward, but I don’t think it’s going to stop the trend that we’ve been talking about since the inception of the show, just in terms of more devices, means more potential for gaming, whether that’s mobile PC, console, and then the extension into the metaverse with AR/VR hardware. It’s obviously a very capital intensive and might not seem as attractive from the margin profile of some of the SaaS companies. But along those lines, I think it’s going to be interesting to see how some of these traditionally hardware companies try to get a piece of that streaming pie. I imagine that some companies will try to offer some kind of subscription-based software services. I know Logitech acquired a company called Streamlabs, I believe in late 2019, to try to get ahead of the curve here. I’m really intrigued and I’ve obviously talked about Logitech on the company, and we’ve mentioned Corsair as well as the competitor, but I think it’s a very exciting space because they have applications that are not just in video games, either. I think Corsair is one that I definitely want to spend some more time on as well.
Jose Najarro: To me, I have nothing against, I want to say, hardware companies. I prefer if I’m investing in the video game market, I prefer investing in the gaming studios a little bit more. But if there was a hardware company, I do enjoy Corsair, they have a brand called Elgato. I actually do have a few of their products here, which I used for content creation. They’re one of the leaders in having hardware for content creators. A lot of the big streamers use Elgatos. I think maybe there might be some Fools. I forgot who it was. Someone just bought a stream deck. I think it was Travis, one of the other Fools, he just personally bought a steam deck, which is great for content creation. I do enjoy Corsair for that reason, they have a little bit more than just gaming. Like Clay mentioned, they also have, for your traditional business, business hardware as well.
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Clay Bruning owns Logitech International. Jon Quast has no position in any of the stocks mentioned. Jose Najarro has no position in any of the stocks mentioned. The Motley Fool owns and recommends Logitech International. The Motley Fool has a disclosure policy.