Wednesday, March 22, 2006

Gamestop (GME) has been one of the best performers in our Stock fo the Week Portfolio. We purchased GME in March of 2005 at $19.95 per share. Today it was selling at $41.36. Gamestop has returned 53+ % and based on all company predictions, we should expect to see it continue to rise.

With 4th quarter reports in,Gamestop achieved record sales, increased our gross margins, even though very low margin hardware sales grew by almost 5% as a percentage of sales, and kept our expenses well under control, even as 792 new stores were added at a record pace. Net earnings for the year surpassed $100 million leaving astron balance sheet on the table with $400 million in cash with operating cash flows for the year came at approximately $283 million.

In 2006, Gamestop expects to open approximately 400 more new stores. Gamestop currently has a 21% market share on all new video game products sold in the US and is now doing business in 14 countries outside the US; with 866 international stores.

According to COO, Dan DeMateo, sales for handheld systems in 2006 are expected to double over 2005.

CFO Dave Carlson reported that he expects to have at least a 25 % growth rate in 2006 with the largest comp in the fourth quarter when the PS3 and Nintendo revolution launch.