Just because a stock is one of the so-called “meme stocks” doesn’t mean it’s automatically a bad investment opportunity. In this Fool Live video clip, recorded on June 25, The Motley Fool’s chief growth officer Anand Chokkavelu explains what Corsair Gaming (NASDAQ:CRSR) does and why investors might not want to dismiss it as another Reddit stock.
Anand Chokkavelu: So, let’s move on to the next one which is Corsair, which is one of mine, CRSR. So, they make hardware and support e-sports and gaming. From headsets to mice to PCs. They do deeper-track stuff like CPU coolers, even chairs. I’ve actually been looking through their kind of their products. I’m actually tempted to get one of their chairs myself. I’ve wanted a higher-back chair to support it. I’ve kind of got a lower one right now. But it’s basically anything to make your gaming setup as high-tech and as comfortable as possible for hours and hours of gaming. They also see an opportunity in content creators. I guess that’s the reason I saw the chairs and got excited. There’s a use case for you. They’re pretty active in many of the markets that they are No. 1 or No. 2 in a lot of things in their gamer and creator peripherals it’s either, No. 2 in keyboards, 3 in mice, 4 in headsets, 2 in streaming peripherals and performance controllers. In terms of gaming components and systems, No. 1 in memory, 2 in cases, first in power supply units first in cooling solutions. They’ve been around since 1994, they’ve $3 billion market cap, 29% gross margin, one year growth of 65%, which we’ll talk about in a minute. Interest rating at 1.6 times sales. Profitable on both the income and cash flow, an actual P/E ratio of about 20. It’s got some debt but seems manageable in terms of the size of it. You may know their competitor, Logitech (NASDAQ:LOGI), which has more than twice the sales and more than twice the net margin percentage. That implies that scale can bring even better profitability. But note that Logitech also had great growth over the past year or so. Pandemic tailwinds seem to have helped the industry and both of them are expecting much lower growth going forward in this year. Logitech’s actually back flattish and Corsair’s low double digits is what they are expecting. On the other hand, gaming makes up about 11% of U.S. consumer internet and media activity. To put that in context, that’s more than social media does and there are 2.8 billion gamers worldwide. It doesn’t seem like it’s a megatrend that’s going away so it’s a pretty solid company to look into even post-pandemic, but I’d say the same thing with Logitech if you’re interested in Corsair, I’d also take a look at Logitech and compare and contrast the two.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Anand Chokkavelu, CFA has no position in any of the stocks mentioned. Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool recommends Logitech International. The Motley Fool has a disclosure policy.