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GameStop a Solid Bet, Touches 52-Wk High

Zacks Equity Research

Shares of GameStop Corporation (GME) surged to attain a new 52-week high of $41.53 on Jun 21, 2013, before closing at $40.78. Shares of this Zacks Rank #3 (Hold) stock have amassed a year-to-date return of roughly 62%.

Based on the current price, this video game and entertainment software retailer is 0.6% below the Zacks Consensus average analyst price target of $41.03. The company currently trades at a forward P/E of 13.19x, in line with the peer group average. Additionally, the company’s long-term estimated EPS growth rate is 13.7%.

GameStop is well positioned to take the advantage of the growing market for video game products and PC entertainment software. The company’s strategy is to branch out through store expansions in favorable localities, by providing the largest title collection of video games, and leveraging its first-to-market distribution network to offer the latest hardware and software releases.

GameStop has been evolving continuously and transformed as a mixed retailer of physical and digital gaming and electronic products. The company’s ventures in digital, iDevice and gaming tablet businesses are expected to be accretive to its results.

Moreover, shares of GameStop have reacted positively to the announcement made by Microsoft Corporation (MSFT) that Xbox One is enabled to play used games and is also not going to levy platform fee, thus enabling the smooth transfer of used and pre-owned games.  GameStop’s buy-sell-trade model of selling new games and buying back used games and PowerUp Rewards program make it a popular destination for gamers.

GameStop is not the only company that is anticipated to benefit from this. The move is likely to auger well for game publishers like Electronic Arts Inc. (EA) as well.

Alongside, shares of New York & Company, Inc. (NWY) soared to attain a new 52-week high of $6.35 on Jun 21, 2013, before closing at $6.22. This Zacks Rank #3 (Hold) stock has generated a year-to-date return of approximately 65.4%.

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