Shares of GameStop, near a two-year low, look like a buy


Walmart's (WMT) announcement earlier this month that it would slash prices on video games by up to 20% sent a shiver through the video-game industry. Shares of Grapevine, Texas-based GameStop (GME), a top game retailer, fell 8.3% on the news to a near two-year low. They haven't recovered since. But the decline could provide investors with an attractive buying opportunity.

While Walmart's price cuts mean GameStop will do the same to remain competitive, the video-game company has a leg up: It doesn't sell just new games. In fact, almost half its profits come from trade-in offers, where consumers bring back their used games and the store then resells them. That's a higher-margin business.