Please ensure Javascript is enabled for purposes of website accessibility

Why Ammo Stock Popped on Tuesday

By Rich Smith - Jan 19, 2021 at 3:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock finds new ways to keep the momentum going in the new year.

What happened

Shares of ammunition manufacturer Ammo (POWW 5.57%) continued to pop off on Tuesday, the first trading day of this week -- and the second day since Ammo announced that it has won a contract to supply a "significant" amount of ammunition to a foreign buyer.

As of 2:45 p.m. EST today, Ammo stock is up 5%, adding to the 1.9% gain it enjoyed the day after the contract was announced.

Green arrow trending up over the numerals 2021

Image source: Getty Images.

So what

On Thursday last week, Ammo informed investors that "it has entered into a significant international transaction involving 7.62 mm ammunition." No specific value was ascribed to the contract, however, nor did management state how long the contract will be in effect, or even when deliveries are to begin (or for that matter, who the buyer is).  

What Ammo did say is that it is intent on "diversifying [its] business" internationally, and that "import/export markets are opening up again and we are seeing success in securing relationships."

Now what

Indeed, Ammo noted that it thinks it "reasonable" to expect it will win "many more" similar international contracts "in the coming months," which may explain investors' enthusiasm over a contract announcement which had, really, very few details revealed about it.

If Ammo delivers on its promises of follow on business, it may be a while before this penny stock sees sub-$1 share prices again.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AMMO, Inc. Stock Quote
AMMO, Inc.
POWW
$4.17 (5.57%) $0.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
322%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.