GameStop shows strong profitability and growth potential despite revenue drop, making it a buy-rated contrarian stock.

GameStop remains an attractive contrarian investment due to its strong profitability and cash-rich balance sheet. Its Power Packs e-commerce platform has boosted collectibles sales by 35% year-over-year, improving margins significantly. Although revenue declined by 14%, adjusted net income and free cash flow surged, with gross margin expected to rise by 680 basis points by FY26 and free cash flow margin at 18.1%. The stock is valued attractively at 9.7 times EV/FCF, with the market undervaluing its operating business amid acquisition uncertainties.