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A Big Upgrade for Smith & Wesson

By Dave Mock – Updated Apr 5, 2017 at 11:39PM

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This bullish call comes from more than just one analyst.

Every day, the sun rises on Wall Street, and a plethora of professional analysts wake to issue new opinions on stocks. Here at the Fool, we use our "This Just In" column to examine some of these picks -- and the track records of the firms behind them -- so individuals can make better investing decisions.

In addition to following professional banks, anyone can use Motley Fool CAPS to monitor the collective opinions of more than 140,000 members, many of whom demonstrate better investing insight than published analysts do.

After Smith & Wesson (NASDAQ:SWHC) spent the past six months at a mediocre three-star rating, more top-performing CAPS members are voting bullishly for it these days, enough to upgrade it to a more formidable four stars. A total of 739 members have given their opinion on Smith & Wesson, with many offering analysis and commentary explaining the recent optimism.

Fewer consumers have spent money at Home Depot (NYSE:HD) or bought a new Ford (NYSE:F) SUV over the past year in the "new normal" economy. But the rush to buy guns and ammo that began late last year, sending consumers to gun shows and retailers like Cabela's (NYSE:CAB) and Wal-Mart (NYSE:WMT), is still going strong. The rush has eased, but sales have been up by double-digit percentages in every month since last October, except July, according to the National Shooting Sports Foundation. Firearm manufacturers like Sturm, Ruger (NYSE:RGR) and Smith & Wesson have booked solid sales and backlog, and ammo makers like ATK and Olin (NYSE:OLN) are still trying to keep up with demand.

Smith & Wesson recently beat analysts' expectations, reporting fiscal first-quarter earnings of $12.6 million compared with $2.3 million a year ago, with a 30% increase in revenue. It also predicted greater-than-expected revenue for its second quarter. Many investors thought that consumer firearm demand would slow by summer, but consumer sales remained strong, as did law enforcement and international sales. The company has continued to supply police forces in Mexico and signed contracts with multiple state agencies in Washington state.

Do you think Smith & Wesson deserves its improved status? Add your thoughts in the comments box below or head over to CAPS to rate the company and check out all the information and opinions the community offers, absolutely free.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 49 points on average since 2002, take a free 30-day trial.

Fool contributor Dave Mock recently upgraded his Nerf gun collection with yet another rapid-firing model. He owns no shares of companies mentioned here. The Home Depot and Wal-Mart Stores are Inside Value selections. Yes, that was the Fool's disclosure policy playing the tree in the school play.

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Stocks Mentioned

Smith & Wesson Brands, Inc. Stock Quote
Smith & Wesson Brands, Inc.
SWBI
$10.35 (0.19%) $0.02
Walmart Stock Quote
Walmart
WMT
$130.06 (-2.50%) $-3.33
Ford Motor Company Stock Quote
Ford Motor Company
F
$12.31 (-3.60%) $0.46
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
HD
$270.94 (0.67%) $1.80
Sturm, Ruger & Company, Inc. Stock Quote
Sturm, Ruger & Company, Inc.
RGR
$51.16 (0.69%) $0.35
Olin Corporation Stock Quote
Olin Corporation
OLN
$44.09 (-2.54%) $-1.15
Cabela's Incorporated Stock Quote
Cabela's Incorporated
CAB

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

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