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Bear of the Day

Hhgregg Inc. (HGG) is a leading specialty retailer of premium video products, brand name appliances, audio products and accessories. Through its superior purchase experience, the company is able to generate customer loyalty, leading to referrals and finally produce repeat business.

However, the company's profitability primarily depends on its ability to anticipate and respond in a timely manner to trends in consumer preferences relating to major household appliances and consumer electronics. In addition, the fierce competition and the still-recovering economy concerns us.

Our long-term Underperform recommendation on the stock indicates that it will perform below the market. Our $22.00 target price, 16.2x 2011 EPS, reflects this view.

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