Apple, GameStop, Hot Topic: A Back-to-School Buy, Sell, and Hold

Analysts parse the latest in retail.

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Back-to-school spending might be a bit tighter this year, given consumer worries over the economy. Wall Street is busy picking winners and losers ahead of the key shopping season.

Here's a few of the latest picks and pans:

Buy: Apple (AAPL) is geared up for huge sales with promotions for the college-bound and huge buzz around the iPhone. RBC Capital Markets foresees a "Back-to-School Mac Bonanza" and says the Mac could grab 4.2 percent of the PC market. A huge 34 percent of respondents to an RBC survey said they were planning on picking up a Mac laptop in the next 90 days. Offers like a free iPod Nano or Touch with some computer purchases are helping the trend. All that, plus expectations for a huge second half for the iPhone (RBC says 5.1 million are set to ship in the fourth quarter), is keeping Steve Jobs & Co. in the money. RBC reiterates its "outperform" rating.

Sell: Teen retailer Hot Topic (HOTT) posted a narrower loss in the latest quarter (1 cent a share, compared with 4 cents a share a year ago), but it still isn't on sure footing. Its apparel and accessories sales remain uncertain, despite better results for its core music-related gear. Mall traffic looks dismal, and even recession-resistant teenagers are expected to spend less. So far, same-store sales for August are off 4 percent at Hot Topic locations and down 11 percent at its Torrid chain. Company officials predict "single-digit" sales declines for the month as a whole. HOTT shares are off nearly 14 percent in late trading, and S&P says "sell."

Hold: GameStop (GME), the video-game chain, had a good quarter, with earnings nearly tripling to 34 cents a share from 13 cents a year ago. It also raised its guidance for the full year, from $2.30-$2.39 a share to $2.45 to $2.50. The highly profitable sales of used games are boosting results, but sales of new games slowed from the first quarter. Shares fell nearly 6 percent early in the day before rebounding late. Goldman Sachs is neutral on the stock and calls the quarter a "mixed bag."