The Consumer Stock Network Best Ideas List: GameStop (NYSE: GME)

Since it is a relatively slow retail news week, we thought it might be worthwhile to publish a list of our favorite consumer stocks. Given the significant number of headwinds facing consumers (such as record high gas prices, declining home values and the corresponding "wealth effect," and lingering credit concerns), we concede that this space may not be appropriate for all investor classes in at the present time. That being said, we still believe there are a number of compelling investment ideas to be found in this sector.

Instead of a long-winded recap of the names, we've decided to release the names one-by-one and provide a brief summary. After we finish revealing our favorite stocks, we will pull together the list into an equal-weighted portfolio and compare our performance to a number of benchmarks over the next year. We may also adjust the list periodically, as there may be better investment opportunities that arise in the coming months.

We'll begin today with video game retailer GameStop (NYSE: GME).

Investment Highlights

  • Opportune hardware/software cycle timing. Historically speaking, video game retailers are the most profitable during the second and third years following a major hardware platform release. Software presents much higher margin opportunities than the consoles they are played on because they are easier to mass produce and require fewer input costs. The latest round of consoles were released in late 2005 or early 2006, meaning that we are currently in this "software sweet spot". Coupled with an impressive line-up of already released and upcoming titles, we expect video game retailers to continue to post excellent profitability over the next 12 months.
  • Economic stimulus check benefit. In our opinion, the Street is overlooking a key consideration of the economic stimulus payments - the age of potential recipients. Individual taxpayers with an adjusted gross income of less than $75,000 will receive the full $600 rebate (joint taxpayers with less than $150,000 will receive $1,200). Yes, The majority of economic stimulus checks will be sent to lower- and middle-income families who will likely spend excess funds on basic necessities or service personal debt requirements. However, there is also large number of stimulus check recipients between the key video-game playing ages of 18-35 that don't necessarily have to worry about housing payments or gas price inflation. Coupled with the recent and upcoming release of highly-sought titles, strong sales should persist for several quarters to come.
  • Leisure activity substitute. Given the recent attention on soaring gas prices, we also expect discretionary spending on travel and other leisure activities to be down substantially this summer (and likely into the back half of the year). As a result, consumers will likely substitute lower-priced leisure activities and we believe video game retailers (especially those with family-friendly titles) could be a key beneficiary.
Investment Risks
  • Valuation. Unlike most retailers and other consumer-related stocks, GameStop's stock has held up reasonably well over the past year. At 19x the consensus fiscal 2009 estimate of $2.38, the stock may be too expensive for some investors, even those willing to give the stock a premium valuation. However, the recent pull-back presents an opportune entry point and we believe there could be some upside to the full-year numbers due to the reasons we outlined above, meaning the stock would be more attractive using forward multiples.
  • Longer-term competitive threats. A few years from now, we are concerned that, like movies and television shows, video game purchases and rentals will be a largely online experience. However, the average consumer does not have the in-home bandwidth or storage capabilities to download large video game files at this time, and we believe GameStop has at least a few years of protection before facing a serious online competition. That being said, we welcome increasing efforts by GameStop to expand its online game sales operations.
For our mock portfolio purposes, we will assume our entry price on GameStop was $44.63 (the closing price as of June 10th).

Employee of The Consumer Stock Network, LLC is a member of the Board of Directors or an advisor or officer of the Subject Company. No
Analyst or household of analyst is a member on Board of Directors or serves as an officer, director or advisory board member of the Subject Company.
Analyst or household of analyst owns shares in Subject Company. Yes, we hold a small long position in GameStop
Analyst or household of analyst owns options warrants, or futures in Subject Company.

Posted in Labels: , |


  1. Unknown Says:

    Great post, what you said is really helpful to me. I can’t agree with you anymore. I have been talking with my friend about, he though it is really interesting as well
    Learn Stock Market

  2. Unknown Says:

    mont blanc pens for sale
    the north face jackets
    uggs on sale
    ralph lauren outlet
    coach outlet store online
    ray ban sunglasses
    cincinnati bengals jerseys
    adidas yeezy 350
    rolex watches
    ugg sale

  3. Unknown Says:

    louis vuitton purses
    ray ban glasses
    nike roshe run
    canada goose jackets
    canada goose online
    air jordan shoes
    ugg boots clearance
    the north face outlet
    ugg boots
    cheap oakley sunglasses

  4. Unknown Says:

    superdry clothing
    kate spade handbags
    uggs outlet
    nike air max
    the north face
    ugg boots
    north face
    kate spade outlet
    beats by dre

  5. John Says:

    michael kors outlet online
    polo ralph lauren outlet online
    pandora charms outlet
    canada goose
    michael kors outlet store
    air max
    pandora uk
    coach outlet online
    ugg outlet
    cheap jordan shoes

  6. Unknown Says:

    Also, green tea helps increase energy and boosts rate of Cla Safflower Oil metabolism Additional advantages of green tea extract include weight loss, reduced.

  7. alamin Says:

    Awesome Information sharing .. I am extremely cheerful to peruse this article .. much obliged for giving us experience info.Fantastic decent. I value this post. visit here for
    Buy Instagram Followers UK

  8. Unknown Says:

    This is a wonderful post.thanks for sharing scout from barkbox for dogs

  9. Unknown Says:

    Extraordinary Article it its truly useful and creative update us as often as possible with new overhauls. its was truly important. much appreciated.
    Status For Whatsapp
    Emotional Status For Whatsapp
    Cool Whatsapp Status
    Love Status in Hindi

  10. Unknown Says:

    This is an extraordinary motivating article.I am practically satisfied with your great work.You put truly extremely accommodating data.
    si swimsuit
    red sox news and rumors
    genie bouchard
    ricci rivero

  11. Unknown Says:

    Much obliged for sharing the data, keep doing awesome... I truly delighted in investigating your site. great asset...
    6 Inspirational Blogs

  12. Saad Says:

    much thanks to you for an awesome post.
    The Standard Methods For A Better Residence Organization

  13. Unknown Says:

    It is an extraordinary site.. The Design looks great.. Continue working like that!.
    Find Out How To Buy Exciting Toys Like A Pro

  14. Mehmood Ali Says:

    Simply respecting your work and considering how you dealt with this web journal so well. It's remarkable to the point that I can't stand to not experience this significant data at whatever point I surf the web!
    Technology Trends for 2018

  15. Unknown Says:

    20180629 junda
    longchamp handbags
    canada goose jackets
    michael kors outlet
    true religion jeans
    michael kors outlet
    ray ban sunglasses
    nobis outlet
    golden goose sneakers
    stuart weitzman shoes
    kevin durant jerseys

  16. ewewe Says:

    I know your aptitude on this. I should say we ought to have an online discourse on this. Composing just remarks will close the talk straight away! What's more, will confine the advantages from this data.
    Imperial Resource Group | Digital | Technology | Systems | Security

  17. Unknown Says:

    so nice i like it.

  18. my work Says:

    Diet plan with bananas, a bloodstreamrapid tone doctor reviews group diet plan, a milk diet .

  19. Unknown Says:

    carbohydrates for the creation of energy keto plus supplement, which makes significantly less than what fat produces.

  20. Unknown Says:

    our society's near obsession with slimming down does keto work because of pervasive weight stigma and the conflation

  21. AG KHAN Says:

    Nice Post Dear live psl match streaming

  22. AG Says:

    Awesome post merry christmas wishes gift

  23. Unknown Says:

    nike air max 270
    lacoste polo shirts
    air force 1
    cat boots
    off white
    reebok shoes
    hermes belt
    stephen curry 5
    coach outlet
    jordan sneakers

  24. followers uk Says:

    Make sure the order will be received by the recipient or you may have to bear the redelivery charges as well. So, this is an important point to keep in mind when placing your order.

  25. supplements Says:

    prepared keto meals keto fiber supplement keto fuel review controls the fat storage in your body. It eliminates the fat from your body, especially from the for you. Many people don’t know much about ketosis, which is why they don’t believe any keto supplement. low carb fiber supplement

  26. Bilibili Says:

    Pandora Jewelry Official Site
    Pandora Official Site
    Jordan Retro 11
    Yeezy boost 350 v2
    Nike Air Max 270
    Kyrie 3 Shoes
    Pandora Jewelry Official Site
    Kyrie Shoes
    Air Jordan Retro 11

  27. S.K.Patil Says:

    dasu hindi status collection Boys Attitude Status

  28. Latest Android News Says:

    Google has declared that a component that has been in beta since 2019 is presently commonly accessible

  29. SEOMaester Says:

    Great Content
    POP Style TV

  30. Mafokel Says:

    Shutters in Blackheath

  31. Leo gaming Says:

    Locksmith provides services in key cutting, changing locks, repairs auto locks also helped in repairing faulty and damaged damaged locks. Locksmith upgrade locks according to BS3621 British standards which fulfill your all insurance requirements. All Locksmiths are (Master Locksmiths Association) MLA Approved so we are fully vetted, inspected and qualified.

  32. Tony Says:

    UK's dedicated and professional Shop fitters are here. We offer many membership benifits to help support those in shoplifting and interrior. we also offers a number of benefits which can help your business win work, train your team. We show you how to create that first impression that will keep customers coming back.