5-Star Stocks Poised to Pop: Sturm Ruger

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, firearm specialist Sturm, Ruger & Company (NYSE: RGR  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Sturm Ruger's business and see what CAPS investors are saying about the stock right now.

Sturm Ruger facts

Headquarters (Founded) Southport, Conn. (1948)
Market Cap $637 million
Industry Leisure products
Trailing-12-Month Revenue $300 million
Management CEO Michael Fifer (since 2006)
CFO Thomas Dineen (since 2003)
Return on Equity (Average, Past 3 Years) 30.6%
Cash/Debt $79.3 million / $0
Dividend Yield 1.7%
Competitors Smith & Wesson (Nasdaq: SWHC  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 93% of the 408 CAPS members who have rated Sturm Ruger believe the stock will outperform the S&P 500 going forward. These bulls include aquapong52 and eksummers620.

Just last week, aquapong52 tapped Sturm Ruger as a particularly timely opportunity: "Strong demand for their products and will likely get even stronger as the election nears. If it looks like President Obama will be reelected, look for demand to skyrocket on fears of crackdown attempts on the industry."

Sturm Ruger even boasts a solid three-year average operating margin of 17%. That's higher than that of main rival Smith & Wesson (7%), as well as other firearm plays like Olin (NYSE: OLN  ) (10%) and Alliant Techsystems (NYSE: ATK  ) (11%).

CAPS member eksummers620 elaborates on the Sturm Ruger bull case:

I totally disagree with guns but that isn't my job. As an investor I think that society has taken the stance the gun ownership is socially acceptable. Taking my emotion out of the equation, gun sales hit record levels on Black Friday. 25% of the buyers are reported to be first time gun owners. Combine that with the fact that firearm safety classes are full if not overflowing, we have ourselves a trend here.

What do you think about Sturm Ruger, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the new TrackPoisedTo CAPS account.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 06, 2012, at 9:54 AM, cachecropp wrote:

    Disagree with guns? How so? Criminals haven't yet agreed to stop using guns, so the rest of us generally need a better form of protection than the 20 minute delayed police response. If you spend 5 minutes of criminal justice research you'll see criminals don't generally agree to abide by the laws. So, your disagreement with guns is pie in the sky unless you live in a bubble.

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