Sturm, Ruger & Company, Inc. Co (NYSE: RGR )

themanofinvesting · Newbie Joined: 05 Jul 2011 Posts: 3

RGR is a firearm manufacturing company that is solely domestic, 99% of its business comes from firearmes (mostly pistols amd revolvers).
It's market cap is 430.64 Million dollars, It's Price-to-earnings ratio is 15.75 (EPS 1.45), It's price-to-sales ratio is 1.59, It's price-to-book value is 3.50 (which is high, but can be overlooked).

I've went through the Form 10-K and NOTHING is stopping THIS company from growing. Accept two things, in the "management's discussion and analysis of financial condition and rusults of operations" the one of the paragraph states "The Company does not consider its overall firearms business to be predictably seasonal; however, orders of many models of firearms from the distributors tend to be stronger in the first quarter of the year and weaker in the third quarter of the year. This is due in part to the timing of the distributor show season, which occurs during the first quarter".
This concerns me...

The second thing is that the charts are iffy on a rise in the stock price,
(let me first point out that I am a options trader and I need a stock's price to appreciate 5 points or more in a months time) I dont think that this stock will achive this goal...

but my confliction is I really like the stock. So i would like the forum's opinion on the matter.

Thanks, themanofinvesting.

nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

themanofinvesting · Newbie Joined: 05 Jul 2011 Posts: 3

I have one more question for the forum.

Does the forum think that RGR will go from $23 to $28?

themanofinvesting · Newbie Joined: 05 Jul 2011 Posts: 3

so nodoodahs, what you are saying is $23 is going to be a new support level for the stock, and the fundementals have no effect on the monthly-term trading for the stock.

rffrydr · Posted: Wed Jul 06, 2011 7:40 am Post subject:

We've already had our big "end of civilization" run, selling out ammunition across the land. Cerberus had to withdraw it "Freedom" IPO ( http://dealbook.nytimes.com/2011/04/04/freedom-group-seeks-to-pull-i-p-o/ ) but this looks like a "buy american" theme which I'm in for. Sell some puts and try to get long in your IRA--or go synthetic long and leverage up the way you like, without the time decay. Twisted Evil

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nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

Your first problem is the conflict between being a short-term options trader, and actually reading a 10-K plus looking at valuation levels. Those things don't go together.

From a business perspective, I'd prefer the weapons manufacturers I 'invested' in to be doing big military and police contracts, domestically and overseas, and that's what I'd be looking for in the MDA.

Fundamentally, I haven't analyzed RGR in any detail, just took a brief look at 5-year cash flow, income statement, and balance sheet, nothing alarming there. I'd look at valuation metrics relative to industry and sector.

Neither of the preceding two paragraphs apply in any way to short-term options trading, however. Fundamental analysis requires months to years to play out a thesis.

Chartwise, I tend to like the relative strength over the last 6 months to a year-plus, and it looks like it set a decent defined trading range since April, with the high-23s being a potential pivot point.
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