Sponsored By:

Time to Pull the Trigger on This Gun Stock

Sturm, Ruger & Co. sold off after it went ex-dividend, making it an excellent value now

   

Sturm, Ruger & Co. (NYSE:RGR) — This firearms manufacturer has a dividend yield of 3.1% and steady earnings. The company attributes its success to an increase in the number of states with statutes allowing a “license to carry.” Additionally, demand has been driven by rumors that the federal government will take action to restrain gun ownership and restrict ammunition, and this caused a rush to buy earlier this year.

RGR paid an extra dividend of $4.50 to shareholders in December. The stock went ex-dividend on Dec. 5. When a large extra dividend is paid, a stock normally falls by the size of the dividend on the ex-dividend date, and on Dec. 5,  RGR  opened at $54.68, down $4.25. However, it closed that day at $52.52, down $6.21, a clear overreaction to the extra dividend payment.

Now at $47.73, the stock is clearly undervalued. Earnings strength, better-than-expected sales, and fundamental evaluation make RGR an excellent value. Technically, the stock fell to just below its 50-day moving average and has strong support at its bullish support line and 200-day moving average at $46.

12 14 12 rgr 300x215 Time to Pull the Trigger on This Gun Stock
Click to Enlarge

chart key 300x84 Time to Pull the Trigger on This Gun Stock


Article printed from InvestorPlace Media, http://investorplace.com/2012/12/trade-of-the-day-sturm-ruger-co-nyse-rgr-2/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.