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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: BigMoney who wrote (16357)	2/26/2002 3:32:08 PM
From: Terry D	Respond to of 18998

Hot Topic, Inc. (HOTT- $21.74) Buy Initiating Coverage with a Buy Market Cap: $678 Million Index: NASDAQ Composite, Russell 2000, S&P 600 Smallcap Brian Tunick - Retailing/Small-Cap We initiated coverage of HOTT with a Buy. The co. has built its entire brand image around the cutting-edge music scene. We expect HOTT to deliver EPS growth of 20-25% over the next few years, driven by square footage growth of 20-25%, the ramp-up of its innovative new Torrid concept, and relatively stable operating margins. We expect EPS to double by ‘05, making HOTT one of the fastest growing players in specialty apparel retail. Within its 1,600 square foot box, HOTT has been generating $700 a square foot and 71% ROI in year one-growing to 97% in year 3. This has also been boosted by the co. posting 12 consecutive quarters of positive comps. We do expect sales per sq. foot to come down to the mid-$600 level as the co. opens its slightly bigger stores-the avg. teen retailer posts sales productivity closer to the $400 level. The co. is a distinct presence in the mall, with stores designed to look and feel like nightclubs and a fashion selection that eschews the preppy, classic styles of mainstream teen retailers. Members of management immerse themselves in the music scene to stay on top of the trends. HOTT’s new Torrid concept will tap what we believe is a vastly underserved market for teen girl plus-size apparel with moderate-priced, fashion-forward street and club clothes and accessories aimed at 15- to 29-year-olds. Management indicates approx. 33% of the chain’s target demographic wear plus sizes. The co. plans to open 15 units in ‘02, and believes the concept has significant growth opportunities. Given the co.’s growth prospects and pristine balance sheet, we believe HOTT can continue to command a P/E multiple of around 21x. Applying this multiple to our ‘03 EPS estimate of $1.25, we arrive at a 12-month price target of $26. As the shares have historically traded at a 10% premium to EPS growth (vs. the 7% discount currently), we think there is some upside in this target multiple. Bear Stearns: 1/02E $0.85 Q4 $0.37 1/03E $1.02 Consensus: 1/02E $0.85 Q4 $0.37 1/03E $1.04 Consensus Rating: 1.8 (Last Updated 2/24)

To: BigMoney who wrote (16357)	2/26/2002 9:34:55 PM
From: Mad2	Read Replies (1) \| Respond to of 18998

BigMoney Looks like APOL is attracting some momo with the Kitty-Copy story. Scientists at Texas A&M University said on Thursday they had used a grant from Genetic Savings and Clone to clone a house cat, and presented the result, a 2-month-old kitten they called cc:, short for carbon copy............Genetic Savings and Clone, which also promises to clone endangered animals and livestock, was founded with cash from businessman John Sperling's Apollo Group Inc. (NasdaqNM:APOL - news). By the way have you looked at the son of APOL (UOPX), a low float backdoor issued in 2001, its even richer Both companies are in the right sector for the times and appear fine for now, just a wee bit overvalued. Watch the volume (which has been on the rise due to Kitty - cc), when it fades both should come back to earth a bit. mad2