Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of gun maker Smith & Wesson
So what: Both Smith & Wesson and its rival, Sturm, Ruger
Now what: As usual, we need to remind ourselves not to let a one- or two-day analyst move affect the long-term thesis we have on a stock. What we do know about Smith & Wesson is that it tends to be a very cyclical play -- i.e., it will move up when the economy is booming, and it's usually a good time to sell when the economy is weakening. With GDP growth a paltry 1.5% in the U.S. in the second quarter, KeyBanc's concerns could very well be justified, and with the stock trading at close to six times book value, there isn't much room for error in the company's coming quarterly report.
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