Hot Topic, Inc. (HOTT)

Smartly run company with no direct competition, selling at a historically low price. You know this stock is going to be higher than this at some point in the future, just look at its price history. This is one store in the mall that always has customers in it. It's mind-boggling to me that people think so poorly of this stock.

A previous pitch implied that this chain would be hard hit because teens had no income nowadays. Since the previous poster didn't bother to substantiate this statement I decided to see for myself what kind of exposure Hot Topic had to the unemployment issue. I went and took a store count by state and compared it to state unemployment rates, this metric showed that Hot Topic is underexposed to the job weakness we are seeing in the U.S. This was quite a surprise to me as HOTT had expanded heavily in the CA and FL markets where the unemployment rate is running at 12.5% and 11.2% respectively. It turns out this chain has done a remarkable job of targetting those regions of the country where the economy has been over-performing the nation.

Also, as anyone with half a brain knows, quite a few teens leech off their parents in this day and age. I was interested in seeing if the population demographics continue to support this behavior on a nationwide basis. I went with the 2000 Census data and looked at the following. The 5-9 age group will be 15-19 in 2010 and their parents should be on average 25 years older and be fairly represented by the 30-34 age group on the 2000 census. If we had an inverted pyramid between these 2 age groups than as a general trend you would be able to support lazy teenagers. If the Hot Topics markets had a normal pyramid between these 2 age groups than lazy teenagers would no longer be in vogue with parents anymore. Using these assumptions on the top 80% of retail stores (I did not run numbers for states with fewer than 10 stores) I found that the Hot Topic markets as a whole had an inverted population pyramid. This chain will continue to benefit from the trend of the past 10 years where lazy teenagers have been spoiled by their parents. This population distribution is not as pronounced as it has been in the past 10 years but savvy retailers should still be able to exploit this demographic for some time.

I will also add that this company is fundamentally solid and attractively valued at these levels with the huge sell-off it has seen in its stock.

No debt, decent sales, close to annual lows.

Upthumb. Excellent cash flow. Only 3% sales growth. Negative cap-ex. Good cash on-hand. No debt. Good margins. Not likely to lose their niche. Lowered their guidance. Good valuations now.

Way too cheap right now. New Moon should help sales this quarter.

illogical advice from acacia 09.11.12

a good teen retailer

Any company who hires a Chief Musical Officer is too awesome to be true.

the cash and properties of this company is equivalent to about $5,45/share.

even in this economy the company will make about $0.5/share for the year.

NO DEPT

Mmm...emo clothing...

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

Fools, listen up! This stock is no 1-Star, and you shouldn't ride it as an underperformer only because its a retail store. Hot Topic has $0 debt and $97M cash money, and has outperformed analyst expectations the last four quarters.

Don't say I didn't warn you...

Riding the wave really on this. Though they did post some good numbers and are growing. Should be interesting.

Check out shockhound.com

This Retailer continues to cruise down the road of profits. Hot Topic is a trippy little chain for those who like to dress funky. Some how the Vato's in management have seem to come to grips with this nasty repression, I mean recession and address their cost structure. Holmes Good Luck Vato's and Rukas!

good store

This stock is HHOTT, why now go with it?

HOTT is Hot

kaylees