Monday, June 30, 2008

Firearms Stocks

Because of the news that the U.S. Supreme Court ruled in a 5-to-4 decision that citizens have a constitutional right to keep guns for self-defense, investors have been taking a closer look at the stocks of firearms manufacturers. It is interesting to note that firearms have been used to sell houses [as gifts, not as threats]. A real estate agent offered free guns to real estate buyers. Here are some firearms and weapons companies that may be worth investigating to see if they are worth pulling the trigger on.

One of the two major gun and firearms manufacturers in the United States is Sturm Ruger & Co. Inc. (RGR), which trades on the New York Stock Exchange. This Connecticut based company has been manufacturing rifles, shotguns, pistols and revolvers since 1948. The stock has a P/E is 42, and a price sales ratio of 0.99.

The other major American firearms manufacturer is the NASDAQ traded Smith & Wesson Holding Corp. (SWHC), a famous name in firearms which has been around since 1856. The company was founded by Horace Smith and Daniel B. Wesson, after selling out their first company, Volcanic Repeating Arms Company, to Oliver Winchester. The company manufactures and sells revolvers, pistols, rifles, hand cuffs, and clothing. They also own law enforcement training facilities. The stock has a PE of 24 and a Price Earnings to Growth Ratio of 0.79.

TASER International Inc. (TASR) maker of the famous TASER guns which are electroshock weapons that use electro-muscular disruption technology to cause neuromuscular incapacitation, which are sold to law enforcement, private security, military, corrections, and personal defense markets. The stock has a PE of 21 and a PEG of 1.06.

Although a small part of their business, General Dynamics Corp. (GD) makes guns and ammunition, although their primary business is combat vehicles, battle tanks, armor and other protection systems, along with aerospace products. The stock has a P/E of 16, a PEG of 1.48. The company pays a yield of 1.7%.

Stinger Systems Inc. (STIY.OB) manufactures electro-stuns and related products, such as including Ice Shield, an electrified riot shield and Bandit, a remote controlled or movement controlled electrified wrap used for controlling detainees in public situations, to professional security, law enforcement, correctional facilities, and military sectors. The stock recently generated negative earnings of 79 cents per share. This is an extremely low cap stock and should be considered extremely speculative.

Metal Storm Ltd. (MTSX) is an Australian company which manufactures 40mm weapons and munitions, including their 3GL, Redback, ammunition, MAUL, and Firestorm ROWS. The stock recently generated negative earnings of 32.5 cents per share. This is an extremely low cap stock and should be considered extremely speculative.

Other related industries include Defense and Aerospace Stocks and the Crime Fighting Stocks.

Author owns RGR.

By Fred Fuld at

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