RICK Rick's Cabaret

If I had $4.00 to spare, I would buy one share of Rick's Cabaret International (NASDAQ:RICK), one of only two conglomerators of strip clubs nationwide. Unfortunately I don't have a spare penny, let alone 400 of them.

I have been watching this company the last 2 months, just salivating; "If I only had some money to invest." Of course, just about every stock looks like a good investment nowadays, except for the banks. (On a side note, I saw the CEO of GE on TV yesterday morning saying plainly that, "All the banks are gonna be nationalized. Get ready, that's how it's gonna be, and that's how it should be now." Paraphrasing a bit.)

Rick's has grown revenues from 14.5M in 2005, to 23.7M, to 30.9M in 2007, to 57.7M in 2008.

Net income at same time: -$0.09/share, $0.40, $0.50, $0.91.

Amazing numbers that may take a bit of a hit from the recession, but should basically keep on growing, in this non-professional's view.

What else do I like about RICK?

Only one other company is in their business: VCGH.

These are technically not true penny stocks but do share many characteristics. If you want to buy penny stocks then we are talking about the OTCBB not the NASDAQ. In my opinion though RICK does act a bit like a penny stock.

There's really no limit to how many clubs they can own. And no one has ever done this before. They could majorly profit from reforming a fragmented industry, like the owner of Blockbuster, what's his name, did most notably with Waste Management and the trash removal industry. In other words, strip clubs have never had serious owners/investors/managers before. Not on this level.

Finally, they are a super high-growth company selling at 4.3 times earnings!

My only real note of caution is if the management is corrupt or irresponsible in some fundamental way. Obviously this is a seedy industry with a long track record of sketchiness.

Rick's is currently valued at $37.4 million. I think that qualifies as a penny stock worth buying.