Saturday, October 10, 2009
How about those Gun Ammunition stocks - is there an investment opportunity here?
Some of my gun toting relatives tell me that the ammunition business is going hot as a pistol right now and wanted me to investigate opportunities that might exist for making some money on the craze. Well there are lots of companies in this space. Corbon/Glaser-Dakota Ammo Inc., Hornady Mfg., Remington Arms Co., and PMC/Eldorado are all privately held or part owned by venture capital partnerships. The two you can invest in are Federal Cartridge Corp. which is owned by Alliant Tech Systems inc. (Symbol ATK) and Olin Corporation, (Symbol OLN). Neither of these are pure plays, and the stocks are just about even for the last 3 years.
If you really want to eye up your scope on the gun and ammo area, the stocks that are benefiting from this action and also the general rise in interest in sporting goods and hunting are the following: Big Five Sporting Goods,(Symbol BGFV), up 162% for one year, Cabella's, (Symbol CAB), up 77.6% for one year, and Dicks Sporting Goods, (Symbol DKS), up 57.5 % for one year. Smartmoney as of 10/10/09 rates BGFV and DKS as a "moderate buy" and CAB as a "hold" right now. Bass Pro Shops, as a side note, does not appear to trade on an exchange and should probably take their company public.
One other thought may be to buy Sturm Ruger, (Symbol RGR), the firearms manufacturer that trades for around $12-13 a share. This stock is up 81.5% over the last year. Financials look pretty good.