Zacks Analyst Interview Highlights: Best Buy, Michael's Stores, PETCO, Hot Topic and Zale Corp.

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Rob Plaza, who discusses Best Buy (NYSE: BBY), Michael's Stores (NYSE: MIK), PETCO (Nasdaq: PETC), Hot Topic (Nasdaq: HOTT) and Zale Corp. (NYSE: ZLC).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Do you see private buyouts affecting other types of retail companies, such as Best Buy?

Ultimately, this is going to depend on the market cap. Best Buy (NYSE: BBY) is probably too much to swallow for any one private company, because it's so big. Definitely those specialty companies that are smaller and farther down the food chain would be better candidates.

Then again, the Michael's Stores (NYSE: MIK) buyout was quite big, at about $6 million. Most are in the $1-2 billion range. PETCO's (Nasdaq: PETC) premium from its previous day's closing price was 45% - the buy-out was at $29, but the company was trading at $19. It takes a big chunk of change to take one of these companies private.

Assuming this is a trend you see continuing, what other companies are likely takeover targets?

I definitely see this as a trend that has been going on the past year or two, and it should continue. On the one hand, you have these private equity firms that are flush with billions in cash, and they need a place to put it. Retailers that are trading down make for a good place to park that cash.

A good example of a specialty retailer I would look at as a potential takeover target is Hot Topic (Nasdaq: HOTT). This company makes teen apparel, mostly "goth"-style clothing - lots of blacks and dark tones. HOTT was going gangbusters a few years ago, but now the stock is in the tank. Everyone knows the brand name, though, and this company is a good turn-around candidate.

Zale Corp. (NYSE: ZLC) is another stock that's way down right now. It's got a pretty sizeable footprint around the country, and diamond rings are always getting sold. It's also in that market-cap sweet spot, at $1.2 billion. Now, this stock is not down as much as PETCO was from its 52-week high, but it is trading close to its 52-week low.

Read the full interview at http://at.zacks.com/?id=2647.

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