RCI Hospitality Holdings, Inc. (RICK): A Bull Case Theory

We came across a bullish thesis on RCI Hospitality Holdings, Inc. (RICK) on Substack by Stock Analysis Compilation. In this article, we will summarize the bulls’ thesis on RICK. RCI Hospitality Holdings, Inc. (RICK)’s share was trading at $51.42 as of Dec 4^th. RICK’s trailing and forward P/E were 97.48 and 12.12 respectively according to Yahoo Finance.

A bustling nightclub filled with energy, illuminated by mesmerizing lights and the thumping beat of the dance music.

Ace River Capital’s top position, RCI Hospitality (RICK), is poised for long-term growth and value creation, driven by its unique nightclub monopoly model and the potential digital expansion through AdmireMe. As the only publicly traded owner of adult nightclubs in the U.S., RICK currently operates 56 clubs across 13 states and 13 sports-bar restaurants under the “Bombshells” concept. These businesses benefit from being local monopolies, as few municipalities are issuing new adult entertainment licenses. RICK estimates there are 500 clubs across the country that meet their acquisition criteria, positioning the company as the preferred buyer in a fragmented market. This gives RICK a long runway for expansion. Despite recent challenges, including a drop in share price, the company is demonstrating strong shareholder value creation through aggressive share buybacks, having retired 401,093 shares (about 4.5% of outstanding shares) as of August 2024. RICK also raised its dividend by 16.7% to $0.07 per share in September 2024. Looking ahead, the launch of AdmireMe, a competitor to OnlyFans, is expected to diversify the company’s revenue streams, providing an opportunity for digital expansion. This new venture positions RCI to capitalize on both physical and digital markets, unlocking significant growth potential. With strong unit economics and an advantageous market position, RICK is well-positioned for continued success, offering an attractive risk/reward proposition for investors.

RCI Hospitality Holdings, Inc. (RICK) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 9 hedge fund portfolios held RICK at the end of the third quarter which was 10 in the previous quarter. While we acknowledge the risk and potential of RICK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RICK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.