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business newsTicker Shock: Could Smith & Wesson's Stock Blow You Away?
Friday's top stories and stocks with potential to move.
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Asian stocks were up a smidge. The Hang Seng closed 0.81% higher and the Nikkei was up 0.85%. Meanwhile European stocks were in positive territory earlier this morning too. And here in the US we are currently trading…
Here’s what I’m focused on this morning:
Smith & Wesson (SWHC):
The following line spoken by CFO William Spengler in a release last night after the bell caught my eye: "Revenue for the fourth quarter of fiscal 2009 was $99.5 million, which is $16.4 million, or 20%, higher than revenue for the comparable quarter one year ago, and gross profit margins improved to 31.0%.” What’s so good about that, you ask? My thoughts on the whole situation:
1. The revenue estimate I’m seeing is a smidge over $90.8 million.
2. There could be a decent trading opportunity here on the heels of this news. If it can close above (and stay above) $5, that could raise its profile. There seems to be the feeling that the Obama administration is planning a crackdown on gun owners. Fear of this might generate interest in things that go pop in the near-term. It remains to be seen, however, how harsher gun restrictions could adversely affect the company.
On a price-to-expected earnings basis, I don’t think it’s much of a bargain.
I look at this as more of a potential trading opportunity at this point. I plan on keeping the stock in my sight and writing about it again in down the line.
Medtronic (MDT):
There was some good and some not-so-good news swirling around Medtronic yesterday, too. For the latter, check out the following article. Per the Associated Press: “Medtronic paid about $850,000 over nearly 10 years to a former Army surgeon accused of forging signatures and falsifying data for a study touting the benefits of one of the company's implants.” 
Frankly, I’m not sure where this is going, if anywhere. That may not be especially helpful, but I wanted to make sure readers were aware of it so they could evaluate it for themselves.
What I would like to comment a little more on, however, is the June 18 release, which states:
“[The board] approved a 9% increase in its cash dividend for fiscal year 2010, raising the quarterly amount to 20.5 cents per share of the company’s common stock, for an annual amount of $0.82 per share. In addition, the board approved an increase in its Share Repurchase Plan, authorizing Medtronic to purchase an additional 60 million shares of its common stock, representing approximately 5.4% of the company's total basic shares of common stock outstanding during the quarterly period ending April 24, 2009.”
My thoughts:
1. That's not something a board traditionally does willy-nilly. It must be pretty enthusiastic about its chances going forward. 2. It's trading at about 10.6 times this year’s estimate and I don’t think that’s too unreasonable.
3. I'd sure like to see a little open-market insider-buying right about now. That might put some minds at ease.
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