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Sturm, Ruger & Company (RGR), Johnson Outdoors Inc. (JOUT): Are Outdoor-Recreation Product Manufacturers on the Trail to Success?

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In 2012, outdoor recreation reached a six-year high in participation, according to the Outdoor Foundation’s 2013 report. The number of Americans ages six and above enjoying the great outdoors increased by 800,000 to 142 million, a participation rate of 49.4%. Outdoor excursions reached an all-time high of 12.4 billion, an increase of 900 million.

Although my own wilderness excursions are usually limited to retrieving a golf ball, allow me to be your guide in analyzing three outdoor-products manufacturers that serve a diverse cross-section of recreational enthusiasts, including hunters, hikers, fishermen and boaters.

Sturm, Ruger & Company

High-caliber performance

Sturm, Ruger & Company (NYSE:RGR) is one of America’s leading manufacturers of firearms. It has more than 30 product lines and 400 product variations, and this company is enjoying a spectacular year. In the first six months of the year, Sturm, Ruger & Company (NYSE:RGR) generated net sales of $335 million compared to $232 million in the comparable 2012 period — a 44% increase. Net income soared 67% to $56 million.

The company lowered operating expenses as a percent of revenue from nearly 15% in last year’s first half to 13.4% this year. Ruger clearly understands operational efficiency.

Much has been made in the press about Americans rushing out to buy guns this year because they feared the government was going to restrict gun ownership. So should we look at Ruger’s outstanding financial performance as a one-shot thing?

Not at all. Ruger is committing its capital into expansion. It recently announced it is building a new manufacturing facility in Rockingham County, N.C. By the end of 2017, the company intends to invest $26 million in the plant and create 450 new well-paid manufacturing and supervisory jobs. In the last five years — during the recession — Ruger managed to create 900 jobs. A company that actually creates manufacturing jobs–what a novel concept in 2013, America!

Calm waters, steady profits

Johnson Outdoors Inc. (NASDAQ:JOUT) manufactures and markets outdoor recreation products in four categories:  marine electronics, which accounted for 62% of sales for the first nine months of the fiscal year;  outdoor equipment (including camping and hiking), 10% of sales; watercraft, which contributed 11% of sales; and diving equipment, 17%.

This company recorded solid but not spectacular results for the first nine months of the year. Revenue was up 3.5% over the same period of 2012. Bright points were strong sales growth in marine electronics and outdoor gear, while watercraft and diving unit sales declined.

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