Rick's Cabaret Int'l, Inc. (RICK)

morgancaps (< 20) Submitted: 5/10/08 3:06 PM : Start Price: $19.24 RICK Score: -33.37

This company meets all of Peter Lynch's criteria for a great stock: it has very high growth of sales, earnings, and positive cash flow, especially compared to its P/E. It has large insider ownership. The business is relatively recession-proof. It has gotten past the start-up stage, showing that it can successfully acquire new locations and integrate them profitably. Acquisitions are usually immediately accretive, and are often bought at least partly with equity. Yet mgt. recognizes that they should not buy with equity at times when the market is pricing the stock too low, so the don't dilute existing shareholders. It owns about 18 clubs, but there are thousands of clubs that are potential acquisitions, so there's huge room for growth, not to mention growing outside the US. Finally, it's a business in a disreputable industry, like Lynch's Service Corp. Int'l example from "One Up on Wall Street." The only thing it's missing is a nondescript name.

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