With more than 7,100 stores throughout the United States and 15 other countries, this company is the world’s largest video game retailer. Highlights Mark Skousen, editor of High-Income Alert.

GameStop (GME) includes well-known brands such as GameStop, EB Games and Micromania. The company also publishes Game Informer, the industry’s largest-circulation video game magazine with more than 2.5 million paid subscribers.

Video games are selling at record levels. More than 155 million people play in the United States alone. (That’s half the population.)

Industry sales topped $25 billion last year -- and for years now have surpassed $5 billion in December alone.

GameStop has successfully created what it calls “GameStop Nation,” a massive audience of players made up of thousands of local game communities around each store.

And the weak economy isn’t slowing them down. Sales at GameStop, while down a bit, topped $9.1 billion over the last 12 months.

So why is GameStop currently selling near the low end of its range? The answer is because Wall Street has this story all wrong.

The conventional wisdom is that because video games can now be downloaded, the physical media will soon become obsolete -- and so will GameStop.

Not so. If customers buy a hard copy of a game -- anywhere -- they can trade it in at GameStop and get credit toward another game.

Also, when a player downloads one of today’s popular games with advance graphics, it takes up a ton of storage space; some games can take more than 10 hours to download! Hard copies take up no memory space and are available immediately.

Plus, GameStop is much more than just a game store. It now has more than 900 Sprint Mobile stores and 76 Simply Mac stores.

But here’s the real reason to pick up GameStop: it is breathtakingly cheap at less than seven times earnings, 28% of sales and only 1.2 times book value.

Plus, earnings are growing at a double-digit percentage rate and the stock yields more than 5.8%. This is a high dividend stock with plenty of upside potential and limited downside risk.

Subscribe to High-Income Alert here…

By Mark Skousen, Editor of High-Income Alert