Generlly speaking, to find the best stocks to buy is to find companies undervalued or have great growth potentials; mall and web-based specialty retailer Hot Topic, Inc. (HOTT) definitely comes in line with the critera. The company sells accessories, music and gift items for young men and women and currently opeartes two business concepts: Hot Topic and Torrid store. Desipte the sluggish of the U.S. retail business this year, the company still reported better than expected results and got high recommendations from analysts.
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Financials:
Hot Topic posted an EPS of 9 cents for the fiscal 2012 first quarter, representing a 12.50% surprise over the analyst average estimate of $0.08. The company previosuly had released an earnings guidance of 7 cents to 8 cents for this quarter. Hot Topic and Torrid store concepts grew sales by 7% and 5%, respectively, boosting an increaseof 6.4% in the top line of the company ($171.5 million) by comparison to the same period of last year. Comparable store sales advanced 7.5% by comparison to 1.2% in the same period of last year. Operating income was $6.1 million by comparison to $0.04 million in the same period of last year. The company recetnly announced a regular quarterly dividend of $0.08 per share payable on July 30, 2012 to shareholders of record at the close of business on July 16, 2012. Analysts averagely estimate the company would deliver earnings of negative 5 cents for the second fiscal quarter versus a net loss of 8 cents a year ago. The current year earnings per share is estimated at $0.38 versus last year’s $0.19.
Stock Perfomance:
HOTT stock price has gained 50.83% year to date. Over the past 52 weeks, HOTT stock price fluctuated between $6.05 and $10.73, and the current share price is 7.08% off the top. On the basis of the latest closing price of $9.97 on July 12, 2012, Hot Topic has a market cap of $420.56 million. HOTT stock price is expensively traded at a trailing P/E ratio of 44.71 by comparison to the peer group avearge of 18.75 and the shares are modestly priced at a PEG ratio of 1.12 by comparison to the peer group average of 1.19. Analysts average stock price target on this stock is $12.08, representing an upward potential of 17.46%.
According to the data provided by FactSet Research, the analyst consensus recommendation on this stock is “Buy.” HOTT is ranked as one of the best stocks by the stock research institution Zacks recently. These fundamental data mentioned above also evidence HOTT as one of the best stocks worthy of buying.
Bottom-line:
To find the best stocks to buy is not so earsy, and it requires discipline and savvy. The stock market changes in seconds, the current situation does not fully indicate the future, and the so-called “best stocks” might change into a discipline shortly after, hitting by any unpredictable negative factors. Therefore, before you jump into any stock, you should ask yourself that whether you have done enough homework and prepated to accept the risks to lose your money.