In this article, we discuss the 3 best stocks to buy according to Adam Wyden’s ADW Capital. To read the detailed analysis and investment philosophy of ADW Capital, go directly to 6 Best Stocks to Buy According to Adam Wyden’s ADW Capital.
3. RCI Hospitality Holdings, Inc. (NASDAQ:RICK)
Number of Hedge Fund Holders: 15
RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is a hospitality company that operates strip clubs, nightclubs, bombshells, sports bars, and restaurants. Furthermore, it operates a few dance clubs and also has the license to sell Robust energy drinks in the US.
On July 28, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) acquired Cheetah Gentlemen’s Club in Florida. The company will own all the real estate associated with the club. The deal was closed for $10 million in cash and $15 million in two 10-year, 6% seller financing notes. The club is RCI Hospitality Holdings, Inc. (NASDAQ:RICK)’s 15th club acquisition in the fiscal year. According to the management, the club is expected to generate $4 million in adjusted EBITDA.
On September 1, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) declared a quarterly dividend of $0.05, payable on September 27 to the shareholders of record on September 13. Moreover, the company has been actively participating in shareholder returns. In the previous two quarters, RCI Hospitality Holdings, Inc. (NASDAQ:RICK) repurchased 255,962 shares worth $14.31 million, at an average price of $55.91 per share.
As of the second quarter of 2022, out of 895 hedge funds, 15 funds held bullish positions in RCI Hospitality Holdings, Inc. (NASDAQ:RICK), collectively valued at $60.7 million. ADW Capital owned the most prominent position, with 899,000 shares worth $43.476 million, representing 20.51% of the fund’s portfolio.
Here is what Greystone Capital Management had to say about RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in its Q2 2022 investor letter:
“As I’ve said before, a frustrating element of today’s market environment is having to watch one of our businesses perform brilliantly quarter after quarter while the stock price either declines or barely reacts to positive operating results. RICK continues to perform well in both their nightclub and Bombshells segments, with their recent 11-club acquisition set to contribute nicely to both the top and bottom line during FY22, while Bombshells growth will continue as the company expands both corporate and franchise locations. In January, RICK stock reached an all-time high of $92/share, only to decline nearly 50% to today’s price as macro concerns dominate the mood and capital flows away from retail, consumer discretionary and restaurant stocks. While RICK’s industry/sector is a tough one for many investors to wrap their heads around owning right now, I believe the company is being unfairly lumped into the broader restaurant and consumer discretionary categories while being compared with weaker and less attractive peers. So why would we want to own RICK? In terms of navigating the current or potential economic environment, RICK’s variable cost structure, balance sheet and access to capital provide significant advantages. The business has pricing power on both the service and alcohol sides, has assets to monetize, and is on a mission to acquire another $20mm of EBITDA by 2023 via accretive M&A where they serve as the buyer of choice for mom-and-pop nightclub operators. Should they achieve this goal, shares would be trading at around 5x next year’s EBITDA making RICK one of the cheapest stocks in the entire restaurant universe. This isn’t lost on management, who are repurchasing shares hand over fist at a high free cash flow yield while the stock trades at unreasonable levels…” (Click here to see the full text)
2. APi Group Corporation (NYSE:APG)
Number of Hedge Fund Holders: 29
APi Group Corporation (NYSE:APG) is an American construction and engineering company that provides safety, specialty, and industrial services across four continents. As of Q2 2022, 29 hedge funds had a stake in the company, with Viking Global taking the most prominent position, consisting of shares worth $503.51 million. In the second quarter, ADW Capital owned 3.1 million APi Group Corporation (NYSE:APG) shares worth $46.407 million, representing 21.89% of the firm’s portfolio.
On July 11, BofA analyst Andrew Obin upgraded APi Group Corporation (NYSE:APG) to Buy from Neutral and maintained his $23 price target. The analyst mentioned that almost half of the company’s revenues are generated from fire inspection and other recurring revenues, and the company’s backlog bears visibility on the remaining project-based revenue.
In the second quarter of 2022, APi Group Corporation (NYSE:APG) reported an adjusted EPS of $0.37, compared to $0.35 estimates. Moreover, the revenues were up by 63.6% on a YoY basis to $1.6 billion, versus q $1.65 billion consensus.
1. PAR Technology Corporation (NYSE:PAR)
Number of Hedge Fund Holders: 19
PAR Technology Corporation (NYSE:PAR) is an American software application company that provides technology solutions to restaurants, retail industries, and governments. At the end of Q2 2022, ADW Capital held 1.65 million company shares, valued at $61.863 million, representing 29.19% of the fund’s portfolio.
On August 10, Craig-Hallum analyst George Sutton reaffirmed a Buy rating on PAR Technology Corporation (NYSE:PAR)’s shares and raised the price target to $50 from $40. The analyst believes that the company has done a “terrific job” in employing M&A to expand its business to take a significant share of the enterprise restaurant market.
PAR Technology Corporation (NYSE:PAR) announced two significant acquisitions since the beginning of 2022. In May, the company announced the acquisition of guest engagement platform, Punchh, for $500 million. In early August, the company announced that it acquired one of Switzerland’s fastest-growing, modern, omni-channel ordering solutions for restaurant brands, MENU.
Here is what Farrer Wealth Advisors had to say about PAR Technology Corporation (NYSE:PAR) in its Q1 2022 investor letter:
“Par Technologies is a leader in the enterprise POS space, servicing restaurant chains such as Arby’s, Dairy Queen, and Five Guys. The company was in the hardware space for most of its existence, but when a new CEO, Savneet Singh, was installed a few years ago, he refocused the company on a newly purchased software called Brink. Singh had done a decent job of shifting the company’s focus to software sales, removing the technical debt inherent in Brink, and making smart acquisitions such as Punchh (loyalty platform). However, our conversations with management led us to believe that the strategy Par was employing was difficult, as re-writing the DNA of a company takes time. Thus, it started to become one of those investments where we kept saying to ourselves “let’s give them one more quarter” which in hindsight, should have been an internal red flag. Our patience ran out these past few months and given the drawdowns and other opportunities in the market, we sold our position. That said, we never built Par into anything but a small position, and it was our smallest position at the time of sale. Considering most of our clients owned the stock from anywhere from $10-25 the end outcome was reasonable despite our thumb sucking. We do think Par will eventually be quite successful in their space, however we think its best to put our money elsewhere for now. We wish the company and management the best and will root for their success from the side-lines.”
You can also take a peek at Best Self-Driving Stocks To Invest In and Best Artificial Intelligence Stocks To Buy Now.
