How Investors Fared with Sturm Ruger This Year

The year is nearing its end, and now's a good time to look at what happened throughout 2012 to the stocks you follow. If you know the important things a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at Sturm Ruger (NYSE: RGR  ) . The gunmaker has had extremely strong fundamentals, with big jumps in sales and earnings. But the company has also faced controversy, especially in light of the most recent tragedy in Connecticut. Below, you'll find more on what moved shares of Sturm Ruger this year.

Stats on Sturm Ruger

Year-to-Date Stock Return


Market Cap

$835 million

Revenue, Past 12 Months

$443 million

Net Income, Past 12 Months

$61.4 million

1-Year Revenue Growth


1-Year Net Income Growth


CAPS Rating


Source: S&P Capital IQ.

What made Sturm Ruger rise in 2012?
From the perspective of sales and earnings, gun companies have had a prosperous 2012. Both Sturm Ruger and rival Smith & Wesson (NASDAQ: SWHC  ) have seen revenue skyrocket, and it has become more common for retailers to earn a big part of their profits from gun sales. For instance, Cabela's (NYSE: CAB  ) gets half its revenue from hunting equipment, including guns, ammunition, and related supplies. Within the business, Sturm Ruger stands out from its peers because of its high margins.

But in the wake of multiple shooting incidents this year, including those in Sandy Hook and Aurora, gunmakers are seeing increasing political pressure to enact more extensive gun-control regulation. Retailer Dick's Sporting Goods (NYSE: DKS  ) has removed certain gun models from all of its stores nationwide, and the recent rise in shares of Taser (NASDAQ: TASR  ) highlights the desire for nonlethal alternatives to guns.

Investors are also responding. Private-equity firm Cerberus Capital decided to divest itself of its stake in gunmaker Freedom Group, perhaps in response to a review from pension plan CalSTRS that might have led the plan to pull its money out of Cerberus' private-equity funds.

Sturm Ruger has benefited from calls for greater gun control before, as would-be buyers scurry to get guns before possible tighter regulations take effect. It's unclear whether things will be different this time around, and Sturm Ruger may not bounce back from its share price plunge as quickly as investors would like.

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Sturm Ruger's immediate future may be uncertain, but we've got a stock you can feel confident about. The Motley Fool's chief investment officer picked it as his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." Accept this exclusive invitation to read this report free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

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