Looking at Smith&Wesson

[EagleTed]

Smith&Wesson (SWB) seems to have turned the corner in it's business. It's still a very risky investment, and still has negative cash flow due to capital spending on machinary, etc. Since returning itself to American hands, it has done a lot of work at repairing the damage to it's reputation in the Clinton/HUD deal, which the new American company is attempting to null and void.

However, recently it's president was fired because it became known that he has a felony on record for armed robbery, believe it or not. He stays on the board.


BUY AT YOUR OWN RISK

I'm looking at it seriously, but see no big hurry to buy.

[EagleTed]

Comparing SWB to StromRuger (RGR)

<TT>
Co......P/E....ROA...ROE.....Div....Debt/Equity

SWB...4.85...15.43..111.93..0%...2.84
RGR...27.18...6.68....8.58..6.75%..0

</TT>

As you can see, you'll pay a high price for RGR's great dividend, but it's lack of debt may make it attractive. SWB, on the other hand, has the greatest potential stock appreciation, at least short term (2-3 years). With that you will assume a greater risk.

I don't recommend either of these companies for a long term holding (ten year minimum) because I don't think the gun business will expand faster than population growth. Their opportunities to export is very limited, imo.

[EagleTed]

SWB closed today @$3.20, a 100% increase since I posted the above.

Sometimes it pays to bet on the underdog, as was shown at the Kentucky Derby Saturday.

SWB is more risky today than it was when I posted, but it may still yield pretty good. My congratulations to their management for the progress they've made.