This looks like a decent entry point. Apparently lots of guns were purchased in Q4 due to fears of what an Obama election migth do to the business. SWHC report in March. Risk reward looks excellent. Besides, when crime begins to ignite, police bureaus will need more ammo, weapons and private citizens might take it into their own hands.
I expect to see a run to 3.50 and 4.00 (half off at each price).
On Jan 28, the stock sold off intraday to as low as 2.04, but buyers emerged to quickly push the stock back up to the 2.30 area. This tells me there's a lot of support near 2.00. Heck, the stock hasn't even seen 2.00-flat since November. I'd rather be even more lax and give SWHC a little extra room below that support level. If sellers can punch through 2.00 and touch 1.90, I no longer wanna stick around. So that'll be my out.
We'll see what happens. Technically, I'm trying to hedge my enormous short exposure with some special situation longs. I read a couple of reports last week indicating that gun and ammo sales were up just over 25% in Q4 as private buyers made purchases ahead of an Obama presidency (thought to be less friendly towards gun-ownership). The stock has been holding thus far (though you never know in this bearish tape).
no a bad play here. I can tell you anecdotally that gun/ammo sales are through the roof. Entire supply chains have been impacted and some manufacturers have temporarily narrowed their product lines to focus on products that could potentially be banned. This would be high-capacity magazines (anything over 10 rounds), assault type rifles, and hi-cap handguns. The behaviors are a bit irrational and really anything that can be horded is being horded. Even large retailers like Cabelas/Midwayusa are having a time keeping popular caliber ammo in stock. Magazine prices have nearly doubled and ammo prices have increased dramatically. Talking with shop owners, many manufactures are already done with all of 09 orders b/c they are at 100% capacity. We'll see how this plays out and the hysteria should abate at some point. It will be interesting to see how SWHC capitalizes on this. If they have capacity to spare then we should see a bump. At the minimum - this can't be a bad year for them. Even if there is some legislation put in place that limits gun ownership for some, it wont do anything but increase the hysteria.