Saints, Sinners & Stocks: Rick's Cabaret

Times may be tough, but no one's giving up smokes or sex. For that, investors in Rick's Cabaret (RICK) can be thankful.

Sales at the publicly traded gentleman's club chain jumped 57% year over year for the first quarter ending Dec. 31, with nightclubs delivering $16.9 million vs. $10.7 million in the year-ago period. Full results for the first quarter will be released next month.

Rick's also recently released its audited fourth quarter and fiscal 2008 earnings, which were pretty respectable compared to its peers. Revenues in the fourth quarter were up 87% year over year and service revenue rose 92.6% over the previous year. While most adult entertainment-oriented stocks are exposed heavily to the weaknesses in the media market, Rick's -- which provides a more "personal experience" than say Playboy (PLA) or on-demand video service Lodgenet (LNET) -- only devotes a small portion of the company to media, the operation of several Web sites.

Rick's shares have been hammered last year, falling more than 80% from its 52-week high. But Allan Priaulx, head of investor relations, attributes this to hedge funds unloading large positions in the stock, which was considered a winner in those portfolios.

"SAC Capital and JLF Asset Management were both reluctant to sell, but had to meet redemptions and our stock had been profitable for them," says Priaulx. Hedge fund Slater Capital continues to maintain a large position. The stock has come off its 52-week low of $3.51 hit in December, rising roughly 18% year-to-date.