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
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|
|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|
Abercrombie & Fitch
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.
[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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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.