Activision Blizzard, Inc. (ATVI), Take-Two Interactive Software, Inc. (TTWO): Power Up Your Portfolio with GameStop Corp. (GME)

An article from The Wall Street Journal estimates that shares of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) may jump 30% following the highly anticipated release.  I believe this is achievable considering previous games in the series have sold more than 125 million copies while earning some terrific ratings.  With GTA V on the horizon, Take-Two is another great way to gain exposure to the game sector.

The payoff

The model that GameStop Corp. (NYSE:GME) uses helps to differentiate it from the likes of Wal-Mart and Amazon.com. With the company accepting trades for mobile phones, tablets, and other electronics, GameStop should be able to gobble up market share.

One example of this opportunity is the current promotion in which it is offering an additional 30% trade-in credit for swapping eligible devices such as iPads toward the new PS4. These types of differentiated promotions (which are virtually non-existent elsewhere) represent key competitive advantages, especially in the early stages of the console cycle.

The company’s successful loyalty program is also unique. In 2010, GameStop launched PowerUp, which became a quick success and has grown to over 20 million members who spend an average of $366 per year. With such a large loyalty program, GameStop now has unique insight into its customers and can use this information to communicate targeted promotions, which should also drive further gains.

The company recently disclosed that 57.7 million shares were purchased last year at an average price of $21.25 for a total of $1.2 billion. Going forward, it is reasonable to assume GameStop will continue allocating excess cash into buybacks, which will prop up earnings.

Conclusion

After reviewing key aspects of the business, data seems to indicate the stock has room to run. Short term, the company will benefit from what appears to be a successful launch of the next-generation consoles. Going forward, GameStop should be able to maintain momentum by capitalizing on its competitive advantages.

The article Power Up Your Portfolio with GameStop originally appeared on Fool.com and is written by Jayson Derrick.

Jayson Derrick has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Take-Two Interactive . The Motley Fool owns shares of Activision Blizzard and GameStop.

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