Hot Topic, Inc. (HOTT)

JakilaTheHun (99.93) Submitted: 5/11/2009 2:39:20 PM : Start Price: $9.74 HOTT Score: -65.18

I tend to be a market contrarian and even though I generally keep a mile away from anything retail, I've decided to green thumb Hot Topic based on the insane amount of red thumbers and short sellers who seem completely oblivious on this stock. Hot Topic's performance has actually been fairly impressive, especially when you consider the current recessionary environment. Earnings are strong and operating cash flows are even stronger. As the company enters into its mature stage and slows down CapEx, free cash flows should improve, as well.

HOTT appears to be significantly undervalued even after the run-up over the past few months. Looks like it should be selling closer to $18 from my analysis.

For a more detailed write-up on the company, see my Seeking Alpha article, "Hot Topic: Turning Shorters Into Goth Kids":

http://seekingalpha.com/article/136852-why-hot-topic-is-a-dangerous-short