These companies and especially game retailers have a great value advantage over other stocks in the market because they have the ability to be able to charge more without a serious loss of volume; something even big companies can only do to a certain extent. Video game companies like GameStop inc. have the ability to charge more without a serious loss in volume of sales. The retailers don’t have the ability to make as much Gross Margin as other companies like Activision in most circumstances however. Gross Margin is a sign of profitability and is calculated by taking the revenue minus the cost of goods sold divided by revenue; companies that sell luxury items like GameStop tend to have high gross margins. The thing that every video game lover knows is that as soon as a new game comes out they just have to buy it no matter what. I remember that you could buy a brand new high tec game for a game system for 50 dollars. Now when you go in there it’s 60 dollars OR MORE for most new games that people have to play when they come out. They can get away with charging this because they are feeding into a habit of Americans and that is they love to play video games. I am feeling groovy so to speak on the GameStop stock but Activision in this case I am a little weary of only because of their deal with Blizzard entertainment which doesn’t seem to have gone too well thus far because as of 2009-april they actually have NEGATIVE earnings i.e. ATVI Activision Blizzard inc.. As far as GameStop GME goes they were cheap in the 20 dollar range but their company now is the in the 30 dollar range which I still think at this point is a great value. GameStop has an excellent management team and great products with a focus of ONLY selling games and being the best at selling games and not a lot of other stuff to lower efficiency.

Feel free too look at my caps page at the top it has the performance of my picks as well including potential video game companies.