GameStop Corporation: Recession-Proofing Your Portfolio?

Gamestop (GME) is a retailer of video game products and personal computer [PC] entertainment software. This is that red hot electronic game market. Look at the price chart below (courtesy of Yahoo) and you will notice that, like its industry, it has a red hot run too….from $4 to $60 in five years. That is an average annual return of 55%!! It has been toying with setting its all time high in recent weeks.

Another plus is it trades with an average daily volume of over three million shares per day. I cannot call that “thinly traded”. I have seen recent comments that this industry is “recession proof” and there is a lot of talk out there about the impending recession.

Okay, so here is a strategy to add some recession-proofing to your portfolio. Wait for a pullback to the $50 level and then snap some up. But let me warn you that GME may be eyed by many investors/traders for the same reason and might not ever return to that level. If you are as impatient as I often am, buy half now and the other half on a dip. Just a suggestion. Above all do your homework and dig into the company. Could there be some disappointments that could spook investors? We don’t want another Biogen Idec (BIIB) do we? FYI- RSI picked GME on 11/30/07 & 12/3/07, so maybe third charm is charm?

Disclosure: none

Comments

[rsr521]

I watch GME on and off, stupidly never bought it. I may need to change that soon. But, the reason I wrote this morning is that it's not right to say, "...average daily volume of over three million shares per day." "Daily" means "per day" so the sentence should stop after "shares.

Good luck, everyone.

[zuma dogg]

i called into cramer's "mad money" show on friday 12/14/07 about Game Stop (GME). Here's the link. It's hilarious. It's a great stock, but i made it sound like it was off -- but the whole market was off -- so it sent Cramer into a hyper-rant as to how much he likes the stock. <param name="movie" value="www.podOmatic.com/flas...;></param><... type="application/x-shockwave-flash" src="www.podOmatic.com/flas...; width="320" height="315" flashvars="playli...zuma.podOmatic.com/xsp...; ></embed><... /><font size="1" face="Verdana, Arial, Helvetica, sans-serif" color="#0033ff&qu... here to get your own player.</strong>...

[zuma dogg]

oops, here's the audio link to the call: zuma.podomatic.com/ent...