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

metoo105 (99.70) Submitted: 5/07/08 9:02 PM : Start Price: $20.75 RICK Score: 13.97

Count me among the growing number who think that this stock is a big fraud waiting to unwind.

The amazing success that the company has enjoyed since opening a club in NYC to be "close to the analysts" has been extraordinary. Lap dances for buy ratings. Lap dances and perhaps even more for debt on cheap terms.

The basic idea here is that even if you can secure cheap debt, unless you are somehow able to get your employees to work under conditions of servitude, which exotic dancers rarely do in the country -- God bless America! -- then the margins here are totally absurd.

I haven't spent much time with their financial statements. But I skeptical that they Ricks will be able to hold this charade together long enough to build the national brand that might bail out some of their more creative accounting.

The basic idea of using inflated stock to purchase and then roll-up titty bars into a national franchise could work, but somehow I doubt it will in this case.

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