Stock Smackdown: Cramer vs. CAPS

Cramming for Cramer

The Fool's free investing community, Motley Fool CAPS,
aggregates the opinion of more than 130,000 members to assign ratings
for each stock's likelihood of outperforming or underperforming the
market.

Below, we look at some top stocks that Cramer picked and panned
during last week's "lightning rounds," and we compare them with how the
CAPS community sees their future.

There's retail, and then
there are retailers, and it seems foolish to lump them all together as
a single entity. Yet Jim Cramer seems to do just that when he
recommends that viewers sell GameStop, by suggesting there are better retailers to invest in.

I actually think the GME sales have not been that
good ... sell, sell, sell. ... I do not like GME. I've got a ton of
retailers that I like more. I think the GME is a played-out name ...

Cramer says …

The game retailer's investors were delivered a one-two punch with an earnings report that offered less-than-gangbusters growth guidance and the news that Wal-Mart (NYSE: WMT) was, er, getting in the game by installing used-game buying kiosks. Yet we've heard this story before. Netflix (Nasdaq: NFLX)
was supposed to be dead and buried by now because Wal-Mart had gotten
into the movie-rental business. Of course, it didn't take long before
Wally World bailed out on the niche market and handed over its customer base to Netflix, which remains as strong as ever.

There are indeed things that Wal-Mart excels at, and few retailers have been able to come close to its performance in this recession. But that doesn't mean it can do everything exceptionally, and the typical game-buying demographic is not necessarily the type that will be attracted to Wal-Mart.

With 95% believing GameStop will outperform the market, the CAPS community thinks the Mad Money host doesn't have game. Believing that the threat of retailer competition is just one of many concerns that have been overstated, CAPS All-Star Har1en
says the game specialist's quantity of titles serves as a competitive
moat against the more limited inventory of Wal-Mart or even Best Buy (NYSE: BBY).

Yes, digital downloads are coming, but there is
always going to be a place for physical stores because of the
blockbuster nature of the industry. Waiting for downloads is
inconvenient, slow, and subject to catastrophic hard-drive failure.
Also, children do not have credit cards. After the recent credit card
legislation, many college students won't have them either.

CAPS says …

The
Walmart/Best Buy competition is overblown. Those stores do not have the
proper culture and brand to handle used titles in bulk. The draw of a
Gamestop store is the sheer quantity of good titles that they carry,
even used. I would be surprised if other non-specialty stores could
compete.

Finally, Gamestop has great service: from a great
industry magazine that both encourages sales and teaches customers
about the industry to the knowledgeable people in their stores who
actually play the games, they make gaming cool. Good luck getting that
service from Walmart.

Your say

While CAPS members may stand
with Jim Cramer or on opposite sides of the field, the
investor-intelligence community is more than what some All-Stars think,
even if they are TV personalities. But what do you think? Is Cramer
right or off his rocker? Why not head off right now to CAPS and sound
off with your thoughts on whether GameStop is still in the game?

Copyright © 2009 Universal Press Syndicate.