One. Two. Three. That’s how many lucrative plays investors can make on the consumer electronics industry. The first one is Best Buy (NYSE:BBY) -- literally a no-brainer at current levels -- which has grown to dominate the space and has pushed many rivals, such as Circuit City (NYSE:CC), to the brink of extinction. However, two regional players have managed to compete very effectively in this cutthroat market as well.

Indianapolis-based hhgregg (NYSE:HGG), which reported surprisingly strong earnings yesterday (details of which can be found here), has gone up against Best Buy by competing on price and customer service, with a focus on providing a broader selection of flat-panel televisions and other appliances. Conn's (NASDAQ:CONN), meanwhile, is based in Beaumont, Texas, and also can match the low-cost approach of the biggest players in the industry, including Best Buy, Sears (NASDAQ:SHLD), and Fry's. Aside from its retailing base, it also runs a major credit portfolio that plays an integral part in its retail operations.

As a result, understanding Conn's requires getting a handle on how it extends credit to customers and securitizes these receivables, which now-retired CFO David Rogers helped walk me through when I met with him last fall. Current credit-market turmoil is causing Conn's to make adjustments for things such as cash reduction in the fair value of its" interests in these securitized assets." I'll spare you the rest of the details, but the key takeaway from the earnings release is that the company is working through credit turmoil and the core retailing business is strong. Case in point: First-quarter sales increased 7.6% as same-store sales grew a respectable 1%.

Gross margins compressed to the tune of 320 basis points as management cited an extremely competitive retail environment, but it was able to stay firmly profitable, with credit portfolio charge-offs staying steady at 3.2%. The company was also able to lean on a national buying group that pools the purchasing power of smaller electronics chains to help keep product costs low.

Posting $0.54 per share and beating analyst expectations helped boost the stock by 4.5% today as investors applauded clarity from the credit side and Conn's continued strength in the electronics category, including LCD televisions and video game equipment.

Conn's credit portfolio is a key competitive advantage, helping it serve a more blue-collar customer in Texas, Louisiana, and Oklahoma. With only 71 current stores and prime exposure to fast-growing Southern markets, Conn's should be able to build on its status as the nation's ninth-largest electronics retailer.

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