Video-game retailer is feeling the pressure

Q:Can GameStop Corp. continue to be a hot stock? What is your opinion? - B.K., via the Internet

Answer: GameStop, the world's largest video-game retailer, with more than 6,000 outlets around the globe, should stay dominant as long as its concept of brick-and-mortar video game stores remains viable.

The question is whether online game distribution will one day kill the golden goose.

The company also faces a challenge to its lucrative used-games business, which allows gamers to trade in used games for credit toward new purchases. Amazon.com Inc. recently entered the used-game market with a mail-in service, and several other large retailers are also testing used-game sales.

GameStop (GME) shares are up more than 30 percent this year after a 65 percent drop last year and a 125 percent rise in 2007.

The seller of game hardware, software and accessories reported a 22 percent increase in net income in its most recent fiscal quarter, which ended Jan. 31. The rise was attributed to strong sales of video consoles and hit games such as Capcom's "Resident Evil 5" and Microsoft's "Halo Wars." Income from its purchase of the French game retailer Micromania also helped.

Analyst ratings on GameStop shares, according to Thomson Reuters, consist of eight "strong buys," five "buys" and two "holds."

Digital delivery, available through firms such as Microsoft, Nintendo and Apple, has yet to make a dent in GameStop's success. A transition to online distribution isn't imminent, but the concept is generating interest. For example, OnLive, an online gaming service built by entrepreneur Steve Perlman, is scheduled this winter to put games on servers and stream them without requiring either consoles or game discs.

GameStop earnings are expected to increase 20 percent in this fiscal year ending in January and 12 percent the following fiscal year. The five-year annualized earnings growth rate projection of 17 percent compares with 12 percent forecast for the electronics stores industry.

Daniel DeMatteo became GameStop's chief executive in August after serving as chief operating officer. The company generates enough cash to pay off its debt and expand its store base.

Because GameStop sells products from all video game vendors, its results are tied to the overall industry rather than any one company. Its largest market shares are in the U.S., Canada and Australia, while European operations have lagged. The firm also publishes Game Informer magazine.

Q:Please give your thoughts on Hartford Midcap Fund, which was recommended to me. - P.H., via the Internet

Answer: The disciplined mid-cap fund, which was closed to new investors in 2003 but reopened late last year, seeks solid yet unappreciated companies.

It doesn't swing for the fences with deep value companies that lack profits or need a turnaround.

The $2 billion Hartford Midcap Fund (HFMCX) is down 33 percent over the past 12 months and has a three-year annualized decline of 8 percent. Both results rank in the top one-third of mid-cap growth funds.

"We like Hartford Midcap quite a bit as a core fund for bolder, intrepid investors, but due to its focus on mid-caps it would be a supporting player for most people," said Michael Breen, an analyst with Morningstar Inc. in Chicago who has tracked the fund for several years.

Phillip Perelmuter, the fund's manager since its 1997 inception, prefers stock of companies that are leaders in their industries.

He doesn't make big sector bets, carefully tracks valuations and spreads risk over about 100 stock names. Lately, he has added some leading retailers whose prices he feels are right and firms that benefit from falling raw-material costs.

Health care represents about 18 percent of the portfolio and consumer services 15 percent, with other concentrations in financial services and business services. Largest holdings recently were Beckman Coulter Inc., Republic Services Inc., UGI Corp., O'Reilly Automotive Inc., Life Technologies Corp., Northeast Utilities, Western Union Co., Ball Corp., St. Jude Medical Inc. and Best Buy Co.

The 5.5 percent "load" (sales charge) fund's A shares require a $1,000 minimum initial investment and have a 1.23 percent annual expense ratio. Wellington Management Co., Perelmuter's employer, runs many of Hartford's funds.

Q:How do financial planners charge for their services? I am looking into getting one. - B.F., via the Internet

Answer: You should ask that when you meet with financial planners, whose job is to prepare financial plans for their clients. There is no uniform way they are compensated.

According to a survey by the College for Financial Planning, which runs the certified financial planner professional designation program, more than half of planners charge a fee for their services (either a flat fee or hourly rate) and also receive sales commissions for financial products they sell to you.

Another one-third of planners charge a fee only, the survey found. Nearly 10 percent of planners charge a commission only, while the remainder receive either salary only, a salary and fee, or a salary and commission.

"The actual amounts planners charge vary considerably," said Christopher Wloszczyna, a representative with the Certified Financial Planner Board of Standards in Washington. "It depends on the type of services and kind of plan provided."

Check the planner's credentials, ask for references and express your expectations. Learn about professional designations at the Financial Industry Regulatory Authority Web site, FINRA.org (click on the "Investors" link), and find out what you should ask a planner at the CFP board site, CFP.net (look under "Learn about Financial Planning").

Send questions to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, AZ 85004-1248 or .