Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, specialty retailer Hot Topic (Nasdaq: HOTT) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Hot Topic's business and see what CAPS investors are saying about the stock right now.

Hot Topic facts

Headquarters (Founded) City of Industry, Calif. (1988)
Market Cap $385.6 million
Industry Apparel retail
Trailing-12-Month Revenue $715.1 million
Management Chairman/CEO Lisa Harper
CFO James McGinty
Return on Equity (Average, Past 3 Years) 1.2%
Cash/Debt $63.6 million / $0
Dividend Yield 3.6%
Competitors Abercrombie & Fitch
Forever 21
Wet Seal

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 46% of the 386 members who have rated Hot Topic believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, jed71, succinctly summed up the Hot Topic bear case for our community:

[T]his is a very high price for a very risky stock. Trading at 27 times earnings and 13 times cash flows. This company is attempting to compete in a very tough industry. In addition, teen and young adult unemployment continue to be at very high levels across the country. Do they really have the extra $$ to spend in stores such as this? My guess is no but maybe Mommy and Daddy are making up for the lack of cash in most teens' pockets.

I expect margins to continue to get squeezed across the clothing industry. Mostly due to higher cotton and material costs (driven by high soft commodity and oil prices). I did not look at their website for long but it looks very grungy and maybe a little Goth. How many teens still adhere to this style?

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