GameStop On the Go
The real winner in the ongoing console war is likely to be GameStop (GME), which has seen its stock soar 60% in the past year, and some 25% in the last three months.
Whichever way the console war turns, this video-game retailer wins, and that could make it a very attractive buy for long-term investors who don't want to experience the nervousness associated with the fluctuating fortunes of console makers and game developers.
Strong growth in sales for the next two years or more, a focus on cost savings and better margins are the main contributors to the stock's attractiveness."GameStop is a very safe way to play the games cycle," says Michael Pachter, an analyst with Wedbush Morgan Securities. "You don't care which console succeeds or which game does well. You just care that people are buying games." Wedbush Morgan does not own shares or have a banking relationship with GameStop. Grapevine, Texas-based GameStop's $1.4 billion merger with rival Electronics Boutique in April 2005 has turned the company into the largest video-game retailer with 4,633 stores worldwide. That deal may be paying off now, not just in terms of adding operational efficiencies, but giving the company the scale it needs to beat rivals, since retailers' supply of the in-demand new consoles is largely based on market share.
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