It's sometimes difficult to understand what's happening in the electronics retail business. Sears and J.C. Penney are expanding these parts of theirbusinesses, even as Best Buy revenues slipped year-over-year in its first quarter and its guidance was pessimistic.

In this complex landscape, several analysts are recommending GameStop (GME) - Get Reportas an investment opportunity. The company has some issues, and is heavily weighted to its games business, but it is still a better option than Best Buy (BBY) - Get Report . It has better long-range potential, particularly if it follows through on indications that it will diversify its business over the next three years. 

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The Grapevine, Tex.-based company operates as a multichannel video game, consumer electronics and wireless services retailer. It announces earnings today. 

In the fourth quarter, GameStop's same-store sales rose 3.1% year over year compared to a 1.7% decline for Best Buy. Over the holiday season, Best Buy reported a 1.2% drop in comparable store-sales while GameStop clocked 4.4% growth over the two-month period. To be sure, the story was a little different in the third quarter, when BestBuy had the upper hand.

And the companies' stock performance has been close, registering small gains. Revenue increases should be about the same over the next fiscal year, as should the companies' earnings per share. GameStop should post 2.6% and 6.7% EPS growth in fiscal years 2017 and 2018, respectively. BestBuy is projected to clock a 3.6% and 6.6% jump over the same period.

However, GameStop has better profit margins (4.3% TTM) compared to BestBuy (2.27%).

Furthermore, with analysts predicting a 23.7% upside for the Gamestock stock over the next 12 months (compared to 10% odd for BestBuy) and a stronger price-to-earnings growth (PEG) ratio valuation, GameStop is a better bet for steady, long-term growth.

In addition, GameStop has hinted that it would like to morph into a global specialty retailer. The company has set a goal to earn more than 50% of its revenues, beyond the physical games business by 2019.


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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.