If you have to choose, buy Smith & Wesson and sell Ruger stocks

Smith & Wesson Ruger

Progress for the S&P 500, Smith & Wesson, Ruger and Vista Outdoor. (Graph: Bloomberg Business)

A turn of the tide. As gun sales return to what many CEOs are calling a normalized environment, many investors use the value of Smith & Wesson and Sturm, Ruger & Co. stock as a barometer for the gun industry as a whole.

The two companies are the only public companies (selling guns almost exclusively) in the industry and in turn required by law to disclose financial statements on a regular basis. But the difference in value of the two companies was vast (and still is).

For instance, Smith & Wesson stock before the sales boom in 2013 ranged from $5 to $10 per share, and Ruger stock hit somewhere above $30. In the months following 2013, the price per share shot up by at least $10 for both companies and remained high even though sales began to drop off significantly. More recently Ruger has been reporting mediocre to sometimes disappointing results whereas Smith & Wesson has made a series of savvy investments that reflected well on the company’s balance sheet.

Looking at the numbers, Alexander Valtsev posted on financial blog Seeking Alpha writes, “I issue a SELL recommendation on the shares of Sturm Ruger & Co Inc. with a target price range of $47 – $51 per share, which represents a downside opportunity of 10% – 16% from current price levels. Ideally, the short position should be supplemented with a long position in Smith & Wesson Holding Corporation in order to reduce risks.”

“I believe that Sturm, Ruger & Co is significantly overvalued, while Smith & Wesson trades slightly below its fair value. In addition, Smith & Wesson has a slightly higher beta,” he writes and adds, “Because Smith & Wesson has a slightly higher beta, there is a protection in the event both stocks move in the upward direction.”

Latest Reviews

  • Tuck & Carry: CCW in a Skirt

    Aimed at those who want the comfort and convenience of a skirt but with the protection of a holstered gun, the Tuck & Carry occupies what I term apparel holsters -- that is clothing/holster duos.

    Read More
  • The Marlin Dark in .45-70 is Stealthy and Modern

    Flash forward the lever gun of Western lore to the 2020s, where Marlin has taken that classic design and given it a modern upgrade. Meet the Marlin Dark.

    Read More
  • Gear Review: Sig Sauer Tango 6T 1-6

    Sig Sauer has long been a big name in the firearms industry, so it came as no surprise several years ago when Sig filled out its repertoire with its own optics line. Today, we’re looking at the Tango 6T, a 1-6 low power variable optic.

    Read More
  • First Look: Hornady 6mm ARC

    Hornady brought another impressive project to the shooting public in 2020 with the introduction of the 6mm Advanced Rifle Cartridge.

    Read More

Loading