SMITH & WESSON HOLDINGS (SWHC) 3.86 -$0.09 (-2.28%) 05:28AM (15 mins delay)

Sturm, Ruger & Co: Strong Cash Flow + Peak SI Ratio (Squeeze) + Low Valuation = Strong Long

Oct 16, 2009 - 6:09 AM EDT

Sturm Ruger (RGR)
$12:50/share
Base case Price target: $19.50 or 15x 2010 trough earnings ($1 ex cash). The Best case could be far more dear.

Tremendous execution: Sturm Ruger continues to execute: new, higher gross margin products, improved manufacturing and sourcing and sharper marketing. While the peak of the gun buying "surge" is over, RGR continues to outgrow the healthy market by dominating the concealed carry personal defense segment and entering the lucrative AR segment. While backlog will fade back to historical levels over the next year, RGR will continue to generate high returns on capital and high cash flow on the solid core (ex surge) sales growth.

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Source: Seeking Alpha (Oct 16, 2009 - 6:09 AM EDT)