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Wall Street likes gunmakers, but from a distance

Quote:...gun stocks have largely recovered from the sell-off following the Connecticut tragedy. Smith & Wesson (SWHC)stock, for example, fell from $9.54 a share the day before the Dec. 14 shooting to $7.79 on Dec. 18. It closed Tuesday at $8.95. Sturm Ruger (RGR)fell to $40.60 on Dec. 18 from $47.73 the day before the shooting, but closed Tuesday at $53.13.

Gunmakers are immensely profitable companies, says Craig Sterling, managing director and global head of equity research at EVA Dimensions. He says both Sturm Ruger and Smith & Wesson have profit margins much higher than the average company.

Smith & Wesson's earnings before taxes, excluding unusual items, rose from $15.2 million in 2008 to $41.2 million in 2012, a growth rate that most companies would envy. Yet, the stock sells for 10.7 times its past 12 months' earnings, according to Morningstar, vs. 15.6 for the Standard & Poor's 500 stock index.

Sturm Ruger saw earnings before taxes, and excluding unusual items, rocket to $98.1 million the 12 months ended September 2012 from $13.5 million in 2007, according to Standard & Poor's Capital IQ. That's an earnings increase most technology companies would envy. The stock sells for 17.2 times earnings, slightly above the S&P 500.

Gun companies are enjoying red-hot sales, but worries about gun control are keeping their stock prices cool.
Ladies of the Second Amendment

"I regard giving as necessary to right the balance" Hu Chung

I've said it before, it wouldn't surprise me one bit if Obama and a large portion of congress are invested heavily in various firearms industries.
i think barring any major legislation it may be a good gamble to invest in firearms. Figure wait till stocks are down a bit but 100000 shares at lower prices. Then just sit on it. Sooner or later another panic will start up and those stocks will shoot up. Then you sell them when you think the peak has been hit.
Ruger's stock prices over the last 5 years

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