GameStop Corporation (NYSE: GME) is
the world's largest video game and entertainment software retailer, offering software, hardware and game accessories for the PC, as well as video game systems from Sony (NYSE: SNE), Nintendo (OTC: NTDOY) and Microsoft (NASDAQ: MSFT). The firm also owns two e-commerce sites and Game Informer, a leading video and computer game magazine. GameStop operates 5,123 retail stores across the United States and in 15 countries worldwide. Amazon.com (NASDAQ: AMZN) and Best Buy (NYSE: BBY) are competitors.
The stock is up nearly forty percent over the past five months, sparked by such issues as better than expected EPS/sales results in Q2 and Q3; upside guidance for Q4 EPS; and solid same-store sales improvements in Q2 (29.1%), Q3 (46.3%) and the nine-week holiday period (20%). The news has the stock cycling through a positive trading channel. The price is consolidating near the base of that channel, where oversold CCI, MACD and Momentum technical parameters suggest the potential for a rise back toward the top.
Brokers recommend the shares with six "strong buys," six "buys" and six "holds." Analysts expect a 25 percent growth rate through the next year. The GME Price to Sales ratio (1.28), Sales Growth rate (59.27%) and EPS Growth rate (181.82%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 86 percent of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $24.95 and $63.77. A stop-loss of $44.30 looks good here. Note that the firm is next expected to report quarterly results in late March.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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