Will GameStop (GME ) be able to recover? This is a stock that has been absolutely beaten down thanks to vicious competition from big box stores and individual used game outlets. Many believe the stock could go the way of BlockBuster, as digital sales are also a threat. That said, GameStop’s recent sales data was strong. Should you sell here with the stock now under $15?

Total global sales for the holiday period were $2.77 billion, a 10.6% increase compared to the 2016 holiday period. In addition, comparable store sales were strong. Total comparable store sales increased 11.8%, growing 13.7% in the U.S. and 7.9% internationally. Worldwide omnichannel sales increased 21.5%. 

This double-digit increase in comps is a turnaround from last years' period which saw a double-digit decline in comparable sales. So, when we hear bears complaining, it tells us that they do not understand the gaming cycle. You see, the holiday period is critical, and these sales were driven in large part to the Nintendo Switch. But you see, the Switch is really the only new and completely novel product.

With the Switch, new hardware sales did well, while used sales should ramp up in the next two years as used Switch software comes to market. Further, you must realize that the PS4 and the Xbox consoles are aging out, and so sales related to these consoles are festering a touch.

Of course, the Xbox One X has launched, and this helped drive some sales, but it's a reboot in many ways, as it simply is a more powerful, 4k and HDR capable system.

Other products such as reboots of the Nintendo DS have brought in sales as well, but the Switch is the real beginning here of a new cycle. Down the road, we expect new consoles from the other majors as well. This is the beginning, in our opinion.

Here is where we remain hopeful despite the pain we have seen from intense competition. New hardware sales in the holiday period increased 38.3%, while video game software sold new was up 7.3%. Video game accessories sales grew 33.7%, primarily related to demand for Nintendo Switch accessories.

These numbers simply should be ignored. In addition, with ThinkGeek, the collectibles business, sales jumped a strong 19.4% to $211.3 million. This was also bullish.

We expect used game sales to start ramping up as the Switch and One X begin to age. The lack of pre-owned demand was reflected in the fact that pre-owned sales declined 8.1%, as customers shifted their spending to compelling new video game and collectibles products.

We do believe that this will shift positive as 2018 progresses and 2019 approaches as there will be a growing demand for used games. Do not forget that side of the business is very high margin, and in high demand. It is also somewhat insulated from the digital threat.

GameStop is also benefitting from digital sales, even if this is a competitive threat. Digital sales and adjusted digital receipts increased 36.7% and 6.7%, respectively. This is positive.

Looking ahead, GameStop needs to continue to adapt and fend off the digital threat, in addition to other companies that sell video games and hardware.

It is a tough business, and acquiring customers can mean sacrificing margins. Still, with the dividend being comfortably covered, while yield is over 10%, it is hard not to be intrigued at these levels.