After a super-star start to 2018, the markets have experienced a healthy amount of turbulence since. There have been a few big drops, and a few big rebounds. But overall, the S&P 500 is roughly flat on the year. Some stocks have held up quite well during these turbulent times. One such stock is video game publisher Electronic Arts Inc. (NASDAQ:EA). EA stock is up 18% in 2018.

Moreover, EA stock is only 3.5% off its recent highs, while the S&P 500 is more than 7% off recent highs.

In general terms, then, not only has Electronic Arts stock outperformed the S&P 500 so far in 2018, but it has also been far lass turbulent.

Why? Video game sales have been on fire. The Nintendo Switch, coupled with a next-gen technology infusion from things like augmented and virtual reality, has created a surge in video game sales in 2017 that isn’t showing many signs of slowing in 2018.

Moreover, micro-transactions and expansion packs continue to become a bigger and bigger part of the video game landscape, two features which allow video game publishes to squeeze more dollars out of each paying customer. Then there is the whole eSports world, which is just now emerging to the forefront and promises huge growth into the foreseeable future.

All together, it is pretty easy to see why EA stock has been a big winner for some time (it is also up 38% over the past year, versus a 13% gain for the S&P 500). But how much higher can Electronic Arts stock soar?

A lot higher, actually. I reasonably see EA stock crossing the $200 mark in 5 years. Here’s why.

3 Big Shifts Underscore EA’s Growth

Most of the tailwinds that have been pushing EA stock higher over the past year will persist over the next several years. That is because the video game world is undergoing some dramatic fundamental shifts. Those shifts are still in their early innings, and each of them implies huge growth ahead.

The first of these major shifts is the shift from traditional gaming to AR/VR enhanced gaming. We saw what innovation in video game hardware can do to video game sales. Nintendo launched the Switch about a year ago.

What followed was several consecutive record months for video game sales. This momentum is continuing today, with video game sales posting their best January in seven years and jumping 23% higher year-over-year in February.

The Switch tailwind will fall off at some point. But over the next several years, there will be a rush of innovation in video game hardware. These traditional gaming systems will start to be infused with VR/AR capabilities.

That hardware innovation will push forward this trend of surging video game sales. Thus, EA stock should continue to be propped up by red-hot video game sales tailwinds over the next several years.

The second of these major shifts is the shift from just buying games to buying games and buying add-ons, like downloadable content and expansion packs. This shift not only increases engagement (EA’s Sims 4 player base grew by 35% last quarter thanks to expansion packs), but also increases the amount of money video game publishers earn per customer.

This is also all digital revenue, so its high-margin. That is a win-win for Electronic Arts and other video game publishers.

The third of these major shifts is the shift from isolation video game playing to eSports. Video games are becoming a much more community-oriented activity, and that is best seen by eSports, which is just now coming into its own thanks to Overwatch League (OWL).

eSports offers a tremendous opportunity for video game publishers to turn their content into worldwide competitive leagues with big viewership and bigger advertising dollars. EA stock is particularly leveraged to benefit from this trend because its suite of games (including NBA Live, FIFA, Call of Duty, and Madden) lend themselves well to competition.

How Electronic Arts Stock Gets To $200

All in all, then, these three major shifts will continue to drive strong operational results for EA. We are already seeing this. Over the past five years, revenue has grown by roughly 6% per year. Over the past 12 months, revenues have grown by 10%.

Because these shifts are all still in their early innings, this 10% revenue growth should be the new norm for the next 5 years. If so, that would put revenues in 5 years at $8.2 billion, from this year’s expected $5.1 billion base.

Meanwhile, margins are zooming higher. Cash flow margins have gone from under 10% 5 years ago to 30% today. The digital revenue shift plus influx of high-margin advertising dollars should allow margins to keep heading higher. As such, it isn’t unlikely that cash flow margins grow to 35% over the next 5 years.

That would imply operating cash flow of over $2.8 billion in 5 years. EA continues to buy back shares, so the share count should look like 285 million by then, implying cash flow per share of just over $10. EA stock normally trades around 20-times cash flow.

That combination of a 20-times cash flow multiple and $10 in cash flow per share leads to a $200 stock price in 5 years.

Bottom Line on EA Stock

It is a winning stock that isn’t overvalued at current levels and has held up quite well against broader market turbulence.

That makes EA stock look pretty tasty here and now.

As of this writing, Luke Lango was long EA.