Times may be tough, but no one's giving up smokes or sex. For that, investors in

Rick's Cabaret

(RICK) - Get Report

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


( PLA) or on-demand video service


( 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.

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"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.

Merriman Curhan Ford analyst Eric Wold has a neutral rating on the stock and agrees that it's cheap. But he notes that three of their top clubs account for 80% of the revenue, and finds it "hard to argue that it's not discretionary spending."

"There are other cheap growth stocks and Rick's doesn't have growth," he says.

The company is careful not to give guidance for 2009, but Priaulx says he expects Rick's to exceed 2008 revenue. While the recession hasn't come through the doors of the New York location yet, Las Vegas can't make that claim. The sour economy has negatively affected casinos and gentlemen's clubs in Vegas -- with many of the latter closing up shop -- whereas the New York location pulled in $300,000 the week before Christmas.

Lodgenet, which provides on-demand movies -- including the adult variety -- for hotels, has struggled as a result of a decline in business travel in the weak economy.

New Frontier Media

( NOOF) distributes mature content via cable providers and its income per share dropped from nine cents in the quarter ended September 2007 to six cents for the same quarter in 2008 and suspended its dividend in June.

Wold points out that Rick's is an acquisition story, and if it can't access the credit markets, then that strategy could be exposed. Yet Rick's dances on. It has booked some large parties in the weak Vegas location for January as conventions come to town and looks to take advantage of weaker players, says Priaulx.

Of course, Priaulx hopes that if there is stimulus package to consumers in 2009, that it will be spent in its clubs. Rick's -- saving the economy one dance at a time.