Buy Alert: Ruth’s Hospitality Group (RUTH)

By Jim Pearce • September 2, 2016

TRADE INSTRUCTIONS

Date: September 2, 2016
Name: Ruth’s Hospitality Group
Symbol: RUTH
Type: Open
Limit: Buy below $15

TRADE TARGETS

Holding Period: 3 months
Average Return: 5.2%
Annualized Return: 20.7%
Stop Loss Level: $12.75

TRADE RATIONALE

Ruth’s Hospitality Group, Inc. develops and operates 150 Ruth’s Chris Steak House restaurants, including approximately 70 Company-owned restaurants and a restaurant operating under a management agreement. The franchise operations segment includes over 80 franchisee-owned restaurants, including over 20 international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong, El Salvador, Japan, Mexico, Panama, Singapore, Taiwan and the United Arab Emirates.

This alert was triggered by RUTH’s low price-to-sales ratio of 1.25, which means that it generates enough cash flow on a per share basis in a little over a year to cover its entire share price. In addition, it has increased its earnings per share by an average of 21% over the past five years, which is greater than its price-to-earnings ratio of only 16 times annual profits.

RUTH has been one of the best performing restaurant stocks over the past five years, more than quadrupling in value before cooling off earlier this year. But our Rapids Profits Matrix now believes it is undervalued, and likely to rebound after it reports quarterly operating results in at the end of October so we’re buying it now.

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Jim Pearce

10/03/16 ‐ 4:50pm ET October 3, 2016 at 4:50pm ET

Someone placed a huge options bet on RUTH earlier this month, which suggests they think the company will either be bought out soon or report much better than expected results at the end of this year! http://finance.yahoo.com/news/call-buyers-charge-ruths-hospitality-142218087.html

Winner

10/05/16 ‐ 2:53pm ET October 5, 2016 at 2:53pm ET

Since I new to this SW, so I place 3 legs options PUT $15/$12.5 spread & CALL $15 for $.40 credit on 5 contracts.

Jim Pearce

10/05/16 ‐ 4:10pm ET October 5, 2016 at 4:10pm ET

We don’t include options positions as part of our advice, but you are welcome to do so if you feel comfortable with it. I have to admit I am intrigued by the huge call position that I referenced below; makes you wonder what somebody else thinks they know that the rest of us don’t!

Guest User

10/06/16 ‐ 12:27pm ET October 6, 2016 at 12:27pm ET

Hello JIM

Quick question, i just joined SW… I know you called RUTH on the 2nd of September and your recommendation was to buy below $15. Would you advice to still by this stock?

Thanks

Jim Pearce

10/06/16 ‐ 12:41pm ET October 6, 2016 at 12:41pm ET

Yes, I’d still buy it as they are due to release earnings at the end of this month and usually that type of event can act as the “trigger” that sends the share price up. I’m still intrigued by the huge call option volume last month in RUTH, which suggests something big will be coming down soon (see me comment at the bottom of this page).

James Fletcher

10/12/16 ‐ 2:06pm ET October 12, 2016 at 2:06pm ET

TRADE TARGETS

Holding Period: 3 months
Average Return: 5.2%
Annualized Return: 10.3%
Stop Loss Level: $12.75

Surely 5.2% over 3 months is more like a 20.8% annualized return?

Jim Pearce

10/13/16 ‐ 9:59am ET October 13, 2016 at 9:59am ET

Oops, you are correct. I will revise to what it should be (which is twice what I am showing). Thank you.

Jim Pearce

10/28/16 ‐ 10:02am ET October 28, 2016 at 10:02am ET

RUTH up 10% this morning after issuing its quarterly earnings report! http://finance.yahoo.com/news/ruths-hospitality-tops-street-3q-110651879.html

CJ

10/28/16 ‐ 10:53am ET October 28, 2016 at 10:53am ET

New member question
The Open Trade list shows a target price of $15.78, will you issue a ‘Sell Alert’ ? Or should we just place a limit order to sell at your target price?
Thank you
CJ

black arrow

10/28/16 ‐ 11:51am ET October 28, 2016 at 11:51am ET

Jim was it one of our members who just bt RUTH 2000 shares?

Jim Pearce

10/28/16 ‐ 12:57pm ET October 28, 2016 at 12:57pm ET

I have no way of knowing, but doubt it since this move occurred contemporaneous with the earnings report release and not our recommendation. Either way, I hope they keep buying more!

black arrow

10/28/16 ‐ 12:47pm ET October 28, 2016 at 12:47pm ET

If you already have a position in RUTH and rehabbing a great day I think that is Super! But here is something I have seen so many times – ever shoot an arrow strait up? Eventually its power fades and reverses. Knowing this thaw who may be newer to this service – like myself – should be able to get a new chance after a pull back. When Savvy traders drive prices up I always expect them to take the moolah off the table.
I am going to send you a link to a chart style most people like to poke fun at called the Ichimoku Cloud.
http://schrts.co/em6Wpu
First there are 2 clouds green which is positive and reddish brown which is negative. In general when a candle is above the green that means it is in an uptrend. You will notice a thin blue line and a thin redline when the blue line crosses above the red this can be a good time to enter. This happened yesterday. It looks like right now it could be the case lower prices may be with us in mid November, this is when I will enter if it occurs. Then we see a hint at the green cloud beginning early December.
If you would like to understand more on the Ichimoku Cloud free I have previously mentioned “Chart School”. You must have a chart longer than 1 month in span because the cloud is projected forward about a month. It is widely used in the far east and there are books published on it. Most of us think its a joke, but consider this it is all plotted from moving averages.
Cheers

Jim Pearce

11/10/16 ‐ 9:32am ET November 10, 2016 at 9:32am ET

Now that RUTH is trading above $16, I have raised the Stop Loss price on it to $15.80 to lock in our target gain %. I will leave this position open as long as it remains above that price thru the end of our target holding period the first week of December.

Jim Pearce

11/14/16 ‐ 3:05pm ET November 14, 2016 at 3:05pm ET

I have once again raised the stop price on RUTH to $16.25 given its continued run up the charts. I will leave this position open as long as it remains above that price thru the end of our target holding period the first week of December. [remember, I only execute the stop loss if the stock closes beneath that price at the close, but not during intra-day trading]

Larry Johnson

11/15/16 ‐ 12:57pm ET November 15, 2016 at 12:57pm ET

I decided to go ahead and get out a little early as I’m content with my gain so far.
(16.50-14.20)/14.20 = 16.2%
However, I’m still gonna hold on to my FEB 17 $17 Call options just a little bit longer.
Good luck to all on the board.

Jim Pearce

11/15/16 ‐ 2:22pm ET November 15, 2016 at 2:22pm ET

Hi Larry. You never have to apologize for taking a gain, so congrats on a nice trade! And like I said yesterday, I’m bailing if it closes below $16.25 before our target holding period expires in a couple of weeks.

black arrow

11/15/16 ‐ 3:51pm ET November 15, 2016 at 3:51pm ET

Hi Larry,
I was curious what call might you be aiming for with RGR? I noticed Jim got some dry humor between the lines, he says, the “Rapid Profits Matrix triggered this alert”. Very good.

Larry Johnson

11/15/16 ‐ 6:59pm ET November 15, 2016 at 6:59pm ET

Black Arrow, I’m gonna get in with just a 100 shares of RGR for now.
However, I’m also “shooting” at maybe buying five Jan 20 calls at the $55 strike price assuming I can get in between $2.15 to $2.19. IF it does pop back up to $57 or better, those options obviously will go “into the money” for a tidy little profit…..I hope…LOL
I’m not in yet on either of these trades. Hopefully, in the morning.

Janis Bell

11/21/16 ‐ 10:02am ET November 21, 2016 at 10:02am ET

RUTH just hit 17.00, wow! Thinking about taking profits before it heads back down.

Jim Pearce

11/29/16 ‐ 2:59pm ET November 29, 2016 at 2:59pm ET

Janis – the RUTH target holding period expires at the end of this week anyway, so feel free to lock in your gain whenever you like! Jim

Larry Johnson

11/29/16 ‐ 2:32pm ET November 29, 2016 at 2:32pm ET

I know options trading is not part of Systematic Wealth’s investment strategy, but on certain stocks, I use the alerts sometimes to do a little options trading “on the side”.
This afternoon, I closed out my five RUTH Feb 17 call options:
(0.92 -0.30)/0.30 = 206.7%
Probably got out too soon, but I’m happy with the gain on em…just wish I had more of em…LOL.
Thank you, Jim!!!!!

Jim Pearce

11/29/16 ‐ 2:56pm ET November 29, 2016 at 2:56pm ET

Larry – Glad to hear it; good work! Although we do not include specific option recommendations in our buy alerts, we do note which trades are optionable since we know many of you use our advice for that purpose.

black arrow

11/29/16 ‐ 3:56pm ET November 29, 2016 at 3:56pm ET

Thats what I always say when I am selling a winning position Larry. Haha
Cheers

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