I own RICK's and think it could go to $40 this year but VCGH has been pounded enough. They have basically the same model as RICK's. If the megadeal goes through, VCGH could pop 50% here really fast. I would buy
aggressively around the $4-4.25 level.
RICK's is really doing things right. Their clubs are a class act. I think
as long as they don't go nuts with the acquisitions and be careful as to what they are buying, it could go to $40 this year.
RICK STRONG BUY TARGET $40
VCGH AGGRESSIVE BUY IN THE $4-4.25 AREA FOR A QUICK POP TO $6
AND A $8 TARGET BY YEAR END 08.
VCGH will be financing clubs through cash on hand or debt. What is their cash position? Is it large enough to make meaningful acquisitions? I just can't picture any club owner doing an equity transaction with them right now...
I still think Ricks should make an offer for VCGH, but Lowrie would have to step down and his privately held company with all the real estate in it would have to be included in the deal.
When the stock goes up 50%-60% from its $3.60 low, I think club sellers might want the equity again. The company may not want to give any until the price is over $12.
Huge egos will stop any merger.
Something to think about is that vcgh is a honky tonk kind of bar, were rick is class act, but i'm sure we could use a few of them and sell the ones that don't fit in. Would'nt surprise me if vcgh broad members what it to.
RICK is the only green I see today for the most part. Looks like we are moving again. VCGH is tainted for now with the accounting issue and their CEO who obviously does not have the management savvy of Eric Langan - or he is simply too busy self dealing. Why mess with #2 when #1 is cheap also? RICK ought to be at least $25 now, even in this market, and I think $35-$40 is not out of the question by the end of the year or early next. It was scary when I bought but I am glad I did.
They had accounting mis-steps in the last two quarters, Q3 '07 and Q4 '07.
It appears that they did not realize that their tax loss carry-over had been used up, and had to book the adjustment in Q4. It was also not factored in their outlook for 2008. The CFO left, and the earnings were late for both quarters. Legal and professional fees were also way up, probably for the acquisitions.
All of this unnerved investors, and the stock tanked. Once these problems are solved, this will be a good investment again, and way undervalued at $4.
BTW, RICK's tax loss carry-over ended last year also, but they were on top of it, and reported taxes properly, IMO.