Every year in the Fall there is at least some built-in tendency for video game related stocks to go up heading into the Christmas season. 

Now we have learned that video game sales are not recession-proof as was once imagined.  Game sales are down.  But the consumer spending freeze seems to be thawing a bit (in spite of the still dismal jobs picture) and the technology keeps getting better and better.

The game systems themselves have gotten cheaper and better.  For instance, the first generation PS3s -- I had one myself -- would huff and puff and get very hot, but the newer ones never have this problem.  Sort of a minor point but the manufacturers are working out the kinks, and the prices have come down.  Also if you look at the graphics of the latest games, they seem a lot better than the 1st generation of PS3 games.  (I can't speak to XBox 360 but I assume they're also better.)

You could buy a company like TTWO or ERTS.  But I like GME because you get a piece of everything, all the games, the consoles and accessories, and importantly, used games.  The manufacturers may not be crazy about Gamestop cannibalizing their new game sales through the used buying and selling, but it's good for the consumer and ultimately profitable for GME.  (They buy the used games for next to nothing.)

 I think it's worth noting that GME has significantly underperformed the S&P since March.  Also over 1 year it has made a round trip.  Of course it's been a tough time period for gaming related businesses.

But despite the short term, the long term picture for GameStop is very bright; gaming itself is a growing business (again, long term trajectory) as a broader and broader cross section of ages buy games.  (Partly it's just generational.  The people who grew up playing video games are getting older, but many of them are still playing games.)

And in terms of gaming, they are the only pure retail play.  In order for me to be right though, consumers are going to have to loosen the purse strings a little, at least when it comes to buying games for the kids.