Smith & Wesson Holding Corp (SWHC) — I last reviewed SWHC stock as the Trade of the Day on Dec. 7, recommending traders buy under $18.50 with a target price of $25. Shares of the firearms and accessories manufacturer hit a low just above $19 that day and then took off, running to a high above $30 in March. But a pullback to the stock’s bullish support line is giving traders another chance to buy.
Analysts at Ford Equity Research rate SWHC stock a “Strong Buy,” saying they expect it to significantly outperform the market over the next six to 12 months. They note that Smith & Wesson’s operating earnings yield of 7% is better than 80% of the stocks they track.
In early March, the company reported better-than-expected earnings and revenue for its fiscal third quarter. Sales jumped more than 60%, boosted by fears of future gun regulations. Smith & Wesson also upped its guidance for the current quarter and full fiscal year, which ended April 30.
When the company reports in mid-June, analysts are expecting to see impressive earnings growth of 90% to $1.70 per share on a 30% increase in revenue to $715 million.
The Street, which rates SWHC stock a “Buy,” has a target price of $30.
SWHC stock hit an all-time high at $30.44 on March 18. It then pulled back to its bullish support line, where it consolidated until last week when it broke from a right triangle at about $23.10. The break pushed shares through the 50-day moving average at $23.83, which is now immediate support. There is further support at the 20-day moving average at about $23.
Buy SWHC stock at $24.50 for a trade to $30 within six months for a potential gain of more than 20%.
