One Sin Stock for Long Term Growth - Rick's Cabaret (NASDAQ: RICK)

If you're a conscientious and socially aware investor, you may have realized that there is often a trade-off between a good financial return and embracing your social values. Socially responsible investing has taken off over the past decade and mutual funds with a focus on Christian values, environmentally friendly companies, or any number of causes are out in the marketplace. But for all the financial funds and stocks that embrace the morally conscious investor, there's also the other end of the spectrum. There are a great number of "sin stocks" that provide an excellent return, regardless of the underlying moral issue. One such stock is Rick's Cabaret (NASDAQ: RICK).

Ricks's Cabaret owns and operates upscale adult entertainment (strip clubs in common parlance) establishments that focus on business professionals and upper income clients. The company has several clubs in Texas - in Austin, Houston, Dallas, Fort Worth, and San Antonio, as well as in the states of North Carolina, Minnesota, New York, Florida, Pennsylvania, and Nevada. You can read the full description of the company and their business here on yahoo.com. The company also has a small website and web presence that sells adult entertainment related items.

You may wonder if your conscience can deal with owning a company that operates strip clubs, but if you're going to try to make money in the market and not take social responsibility into account, why not go all out? My own Dad is a great example of this issue. He donates money or is a member of The Audubon Society, World Wildlife Fund, and numerous other environmental organizations, yet owns stock in Massey Energy, one of the world's largest oil drilling and coal mining companies, and actively strip mines entire mountain tops. If that isn't sacrificing values for the sake of a high return, I don't know what is.

Rick's Cabaret has some serious growth potential as they acquire locations slowly and grow organically. The stock has increased 83% over the last 12 months, and though the P/E Ratio is on the high side (14), it may be wise to add the stock to your watch list and buy on a dip or market correction. (All stock information as of market close on 1/8/2010 from Google Finance). So before you condemn a company that operates strip clubs, check out the fundamentals and decide for yourself if you can live with the return that the investment will generate.