Smith & Wesson Holding Corp (SWHC) — Shares of this firearms and accessories manufacturer rallied more than 3.5% last week following Wednesday’s mass shooting in San Bernardino, Calif. While the S&P 500 is up 1.6% year to date, SWHC stock has more than doubled this year.
The Street rates SWHC stock a “buy.” Its analysts note revenue growth, momentum, positive cash flow, expanding profit margins, a solid financial position and reasonable debt as positives.
The company is expected to report fiscal second-quarter results on Dec. 8. Analysts expect revenue to jump almost 28% and for earnings to more than double to 20 cents per share.
For fiscal 2016 (ending in April), the consensus estimate is for sales to increase 12.8% to $622.7 million and for earnings to jump 33% to $1.20 per share. For fiscal 2017, they see a 4.5% rise in revenue to $650.8 million and a 12.5% increase in profits to $1.35 per share.
On Friday, SWHC stock hit a new closing high of $18.99, breaking a triple-top and completing the fourth ramp up since February. Support is at the 50-day moving average at $17.94, then at its bullish support line at about $17.25, and finally, its 200-day moving average at $16.12.
The breakout followed a buy signal from my proprietary indicator, the Collins-Bollinger Reversal (CBR), at $17.49 on Nov. 16. With momentum strong, buying volume was significantly above average on Thursday and Friday. MACD is also on a strong buy signal.
Buy SWHC stock under $18.50 with a target price of $25 for a potential return of 35% within three months.
