Smith & Wesson Holding Corporation (SWHC) Can’t Make ‘Em Fast Enough

Olin also pays a 3.4% dividend yield, which makes it attractive for income investors. (The stock is still likely to trade higher as consumers buy more bullets for their new firearms.)

For the fiscal year ending April 30, Smith and Wesson earned $1.22 per share. Considering the company’s growing backlog of orders, and commitment to growing its manufacturing capacity, I expect the company to continue to grow profits over the next year.

The stock is currently trading below $10, which represents a tremendous value. We can buy shares today and pay only eight times earnings to own a piece of this growing company.

Investors appear to be skeptical of the company’s future growth, worrying that consumers will not buy more guns in the future because they have already booked massive purchases over the past several quarters. But considering the company’s extensive backlog of orders, it is clear that demand continues to be strong, and it will take some time for the company to fill all of its orders.

So for the next several quarters, we should see strong earnings for the Smith and Wesson as it completes sales currently in the backlog, and continues to take new orders from customers.

As the gun control debate continues to rage, I expect demand for firearms to continue to grow. This should drive strong first-quarter profits for Smith & Wesson Holding Corporation (NASDAQ:SWHC), and create more value for shareholders.

Sturm, Ruger could also turn out to be a catalyst when it reports earnings on July 31. If that company is able to beat expectations the way Smith and Wesson did this week, investors will likely buy both stocks.

Amid growing demand for firearms, I would not be surprised to see Smith & Wesson Holding Corporation (NASDAQ:SWHC)’s stock hit $14.50 before the end of the year. Even this would only represent a valuation of 12 times current earnings. At this price, investors could book a gain of nearly 50% over a six-month period.