RGR - Sturm, Ruger & Co.

[Henrique Costa]

Profile: Sturm, Ruger & Company, Inc. engages in the design, manufacture, and sale of firearms in the United States. The company offers its products under ‘Ruger’ name in four product categories, including single-shot, autoloading, bolt-action, and lever action rifles; over and under shotguns; rimfire autoloading and centerfire autoloading pistols; and single action and double action revolvers. It also manufactures and sells accessories and replacement parts for its firearms. In addition, the company manufactures and sells investment castings made from steel alloys. It sells its firearms through a network of selected licensed independent wholesale distributors, as well as markets investment castings through manufacturer’s representatives to commercial, sporting goods, and military sectors. The company was founded in 1948 and is based in Southport, Connecticut.
Mkt Cap: 236M
Website: http://www.ruger-firearms.com/

Trading Thesis:

Short term play, based on TA and FA.

- Trading inside an ascending channel, the optimal entry price would be a little below $12, but I'm not waiting. I'm expecting it to test the higher range of the channel soon (14.50/15.00)

- Despite being a 236M small cap, the company exists since 1948 and it's very solid. With shareholder's equity twice the liabilities, and lots of assets, the current estimates for FY09 are 1.35$ EPS, so it trades at just 9.2X times 09 earnings while the sector trades at 16X. With this numbers I see potential to 20/25 long term, but this is just a short term trade.

Trading Plan:
Buy 5% @ the open, stop @ 11.25 and limit sell @ 15

regards,