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You may not know the name Turtle Beach (NASDAQ: HEAR), but this stock should be on your radar.
Turtle Beach dominates the console video gaming headset markets in North America and the U.K. with nearly 50% market share.
It’s a good business to be in with the rise of competitive live video gaming and the explosive popularity of Battle Royale-style games like Fortnite, and Activision Blizzard’s (NASDAQ: ATVI) new Call of Duty: Black Ops 4 with its battle royale Blackout mode.
With these games, player-to-player communication is essential, and thus Turtle Beach’s high-quality headsets are necessary and in-demand equipment.
While this style of gaming is relatively new, it’s beginning to break into the mainstream with millions of players worldwide and professional gaming competitions broadcast on the likes of ESPN, giving Turtle Beach plenty of ground to gain.
Turtle Beach is the only pure-play in the gaming headsets space, and is a small-cap at a market cap of just $268 million. A big competitor like Logitech (NASDAQ: LOGI) offers gaming headsets as well, but that isn’t their main focus as they offer a wide range of computer and related accessories.
Since the bulk of Turtle Beach’s sales are in North America and the U.K., the company has a massive opportunity in China—the world’s largest gaming market—which CEO Juergen Stark says is a “virtually untapped” market by the company.
So far this year, Turtle Beach has “seen unprecedented industry growth… in the headset market,” with the company outpacing industry growth by around 38%, said Stark.
Turtle Beach reported its Q2 results last month with net income rising to $6.3 million compared to a net loss of $7.1 million last year, and with earnings per share (EPS) of $0.40 compared to a loss of $0.57 in the same period last year.
The company is expected to report its Q3 results on November 1, and is projected to report earnings of $0.47 per share, representing year-over-year growth of 1,275%, with revenue of $65.83, up 82.97% compared to the same quarter in 2017.
Shares are up 1,018.89% year-to-date, though shares are down roughly 70% since its highs reached early last month.
The average analyst price target for the stock is $38.75, suggesting possible upside of 92.4% over the next twelve months. Late last month, Wedbush reiterated its Outperform rating for HEAR with a price target of $42 – 108.5% higher than Thursday’s closing price.
If you’re looking for a pure play in the growing video gaming headset market, Turtle Beach looks like a good option considering it’s trading at a discount from its recent highs and given its projected growth for the year.