After their last analyst/investor day, Cabela’s (NYSE:CAB) CEO Thomas Milner invited Wall Street analysts to go hunting. Picturing Wall Street analysts in camo and orange vests reminds me of the scene in Mad Men where ad guy Ken goes hunting with the GM execs and they shoot him in the eye. “You’ll shoot yer eye out!” indeed.
Gun-toting analysts aside, hunting is big business and several stocks benefit. Although the number of hunters fell by 10% at the beginning of this century, 6% of Americans over 16 still hunt, whether by bow or gun. Figures on the actual number of hunters vary widely from 15 million to 45 million Americans. These numbers don’t include anglers, campers, or paddlers so the total number of outdoor sportsmen (and women) is likely higher.
Plum Creek Timber Co. Inc. (NYSE:PCL) offers leases for recreational hunting clubs. Some leases also allow food plots and camping. Most of the leases are in the South, the Pacific Northwest, and Great Lakes area. This is a small part of its revenue stream but it shows they are monetizing every inch of timberland.
You probably figured Plum Creek Timber Co. Inc. (NYSE:PCL) was a play on housing with all its timber and it is, but the company owns 6.4 million acres and is involved in mineral extraction, natural gas production, communication, and transportation as well as its main business of timber management.
Plum Creek Timber Co. Inc. (NYSE:PCL) is actually a REIT and so pays a generous dividend of 3.90%. The stock is up only 18.76% in the last year and trades at 6 times book at a trailing P/E of 32.50 and a forward P/E of 27.63.
Analysts are growing slightly more bullish with an upgrade by DA Davidson on June 19 to neutral. Analysts have a $51 median price target.
Shooting out the lights
Sturm, Ruger & Company (NYSE:RGR) is a firearms manufacturer and after Smith & Wesson Holding Corporation (NASDAQ:SWHC)’s beat on both top and bottom line, things look good for Sturm Ruger’s earnings on July 31. Analysts have been raising their EPS estimates for the gunmakers over the last few months and Sturm Ruger may be a better buy if it disappoints with increasingly lofty expectations.
It offers a 4.10% yield and a trailing P/E of 11.92 with no debt. Sturm, Ruger & Company (NYSE:RGR) has had 22.65% revenue growth over the last three years. The stock has outperformed the S&P 500 with a gain of 31% over the last year and that was on top of gains from last year when the gunmakers had so much demand that there were supply shortages.
As Fellow Fool Dan Dzombak notes, the company is shareholder-friendly, paying out a variable dividend that can soar in good times and while lower in bad times, doesn’t cripple the company’s operations.
Caveats with Sturm, Ruger & Company (NYSE:RGR) are the same as with Smith & Wesson: headline risk and analysts’ predictions of decelerating EPS growth. Both companies have proved analysts wrong over the last two years with applications for background checks for gun permits at all time highs. But, headline risk explains the high short interest at 23.40%
Ruger has a close relationship with Cabelas Inc (NYSE:CAB)’s offering its Cabela’s Club members special events at its Ruger Gunsite Academy.
Speaking of Cabelas Inc (NYSE:CAB)’s, it is one of my favorite names and if it had a yield, it would be an almost perfect stock. If you have never gone to a flagship store, I highly recommend it. Maybe take a free archery or sporting class while you’re there. Don’t forget to try the elkburger.