Tuesday, September 21, 2010

NASDAQ : Rick's Cabaret International

Rick's Cabaret International (RICK)
Rick's Cabaret International is a company that operates upscale gentlemen's clubs and restaurants. They have been making some decent profits at the first half of the year. The 3Q result was just released and it's a little disappointing. For the 3Q, the company made just approx $850,000 or $0.09 per share. This is actually less than half of the profits from a year ago. However, the year-to-date profit of $4.58mil is an improvement comparing to 2009's $3.41mil for the first 9 months.

The stock has came down a long way since March 2010 from $16 to the current value of approx $7. I value this stock for 3 main reasons :
- it's a profit making company and is actively acquiring lots of smaller clubs recently
- it has a pretty healthy balance sheet and I believe the company will be fairing much better as the economy recovers
- this industry has a pretty high bearer of entry and I don't foresee much of the competition that can compare with Rick's

Technically, the counter has broken the downward trendline. I believe this counter should start to move uptrend instead of the downtrend over the past 6 months. This could be a mid-long term counter and I'm prepared to hold it for a while.

Entry point : Now (whatever price below US$7)
Cut-loss : Approx US$6

*Note : This is a company that operated within a "sinful" industry. To put it blatantly, Rick's operated strip clubs so if it's against your morale principles to deal with anything "unethical", please avoid this counter.

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