Rick’s nightclubs offer live adult entertainment, restaurant, and bar operations in Houston, Austin, San Antonio, Minneapolis, Minnesota, New York, Dallas Fort Worth, Charlotte, and other cities under the names Rick’s Cabaret, XTC, and Club Onyx.

As of September 30, 2008, Rick’s operated 19 adult nightclubs.

Rick’s is a best-in-breed player, and one of the few public companies that operate in this space.

With the recent headwinds in the economy, it will be interesting to see by how much Rick’s is affected, but odds are they are definitely going to be affected.

The good news is that Rick’s has recently announced a stock buyback program, there has been some slight insider buying, and the company recently preannounced Q4 and full fiscal year (ended September) earnings and results which were mostly very positive, including or excluding Rick’s recent acquisitions.

In fact the company still had positive same-store (or same-club) sales growth in what is an extremely difficult retail environment.

For this reason, I believe that with Rick’s stock price being where it is, a 1/4 position buy is warranted for long term investors with a strong stomach for volatility, and a long time horizon, as Rick’s will emerge from any current downturn in a much stronger position for future growth due to its continued strong cash flow and margins, as well as intelligent acquisitions.

#6: AuthenTec, Inc.: HOLD

AuthenTec (NASDAQ: AUTH): AuthenTec is the world’s leading provider of fingerprint sensors and solutions to the wireless, PC and Access Control Markets.

If you’ve been following my picks lately, it will come as no shock that AuthenTec is hurting as a result of a significant customer loss, that will severely impact 2009-2010 sales and earnings, and raises serious questions as to whether or not AuthenTec can even sustain themselves as an ongoing company.

That being said, AuthenTec just released earnings this week, and as I wrote, things weren’t horrible.

There were some positive developments including news that the customer loss that they thought was going to affect their revenue and earnings in the back half of 2009, will not actually impact them until well into 2010, thus allowing AuthenTec more time to make up the difference and find new customers and applications to overcome this loss.

You can read all about AuthenTec’s last company update and conference call about these issues here.

With shares trading at around $2.00 per share as of this writing, the downside is limited as a result of AuthenTec having $2.38 per share in cash, and a tangible book value of about $2.58 per share.

With a market cap of only $53 million, and having $67 million in cash on their balance sheet with no debt, the stock is currently trading below cash value!

I do not recommend purchase of shares in AuthenTec for those that are risk averse, and for only those who can stomach further losses, or are playing this stock for the bounce back that might come as a result of a takeover.

For AuthenTec’s intellectual property alone, there is value in the shares of the company, and I would not be surprised to see AuthenTec bought out by a larger player within the next 6-12 months because of their dirt cheap valuation, and the assets that they do possess.

If you own shares of AuthenTec, now is not the time to sell. There is some value here that is not currently priced into the shares of the stock.

If you don’t own shares, tread lightly, and at your own risk.

#7: PROS Holdings, Inc.: SELL

PROS Holdings, Inc. (NYSE: PRO), is a leading provider of pricing and revenue optimization software worldwide, in five major markets: airline, hotel, cruise, manufacturing and services.

PROS has proprietary pricing algorithms and systems that have been developed and refined over many years of implementation and experience, that provide the company with a distinct competitive advantage over the many rivals that troll the pricing optimization space.

When I recommended the purchase of PROS shares, I did not fully appreciate the potential severity of the downturn in IT spending, and the markets in which PROS operates.

Even with the stock trading around $7.00 per share, I thought that there was more downside risk than upside potential.

With shares now trading at $5.50 as of this writing, recommending selling shares at $7.00 when I did was indeed a prudent thing to do, as the shares are now down over 20% from where I recommended they be sold not too long ago.

I detailed my exact reasons for selling shares of PROS here.

The question now becomes, with the shares significantly lower than before, is PROS actually a bargain at these prices? (See page 2)

I definitely think we are getting there, but wouldn’t venture to guess until after their next earnings announcement on 11-6-08.