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Sturm, Ruger & Co. Inc. Message Board

  • je.starling je.starling Jul 23, 2013 4:29 PM Flag

    No Runup Into Earnings Apparently

    RGR has been negative the last 7 of 8 days. Think there is still room to sell? 7-23-13 was a low volume day, perhaps indicating the selling is subsiding. If you look at the daily chart, the volume is all driven by big stacks of sells at various isolated timepoints throughout the day. However, technicals look like there will be additional selling pressure.

    It doesn't look the market believes earnings will be any good. With such lowered expectations, perhaps we will see a pop on earnings day if it still looks like good news. Some will point to this as evidence that the so-called gun bubble has popped, but I don't think that's the case. Anyone have any thoughts on why RGR has been dumping for the last 8 days?

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    • When Obama signs the U.N. gun treaty later this month, gun sales will spike again, and RGR will rise again.

    • I think there could be uncertainty regarding the expansion into the 3rd facility. If you look at the performance since 7/8 close, RGR outperformed the market for the first 3+ trading days, being up about 6% vs 1.5% for the market. So the initial reaction was decidedly positive. Then perhaps either worry set in or the shorts decided to try to make the chart look bad or MMs decided to tee the ball up for a good earnings shot. Right now RGR is pretty much flat since the announcement, with the market up 3.2%. It is possible that the 7/8 close of 48.27 is serving as support and we won't see much more downside. There could be some skittishness with the market trading at near all time highs and buyers are waiting until closer to earnings to jump in. Everyone knows how this stock has traded in the last year, with irrational volatility surrounding earnings releases, in my opinion due to politically motivated entities with deep pockets.

      • 2 Replies to captainwho2
      • The North Carolina governor hasn't announced any tax incentives for the Mayodan plant, and that could be a deal-breaker, since we know that Michael Fifer is very attentive to details. Texas, Florida, and South Carolina are still in the running until the incentives are put in place.

      • PS: If you superimpose SWHC on the RGR chart you'll see that there has been a high degree of correlation (directionally, not magnitude of move) between the two since the 7/8 close when RGR announced the expansion, with RGR peaking right about the time that SWHC hit the $11 tender level for the 2nd offer, only then SWHC had another day of gains where it overshot up to 11.38. But then both stocks were more or less pulling back with the market rising over the next several days and now SWHC is at a level slightly below the 11 tender offer level where you would expect it to be, which may indicate that RGR has bottomed as well.

        It would be pretty stupid for the market to treat the two stocks the same (directionally) at a time when SWHC is trading under artificially stimulated conditions, but that's the kind of stupidity we could end up with in computer algorithm trading especially at a time of low volume like we have now. Just one other possible explanation or observation.

    • The run up will start just about the time the majority believe that it is sputtering out. My best guess is in the next few trading days it starts its move up, followed by dramatic spikes over the next 2 weeks. I predict we reach $53 before earnings are released and $58 in the few weeks that follow.

      Sentiment: Strong Buy

 
RGR
58.21+0.76(+1.32%)1:19 PMEDT