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Subject:  Two under-valued stocks Date:  8/20/2010  4:00 PM
Author:  kahunacfa Number:  2114 of 2569

Both companies in the same industry - Firearms. The two companies: Sturm Ruger(RGR) about $13.15 per share and Smith & Wesson Holding Corporation(SWHC) about $3.75 per share. Of the two companies Smith & Wesson Holding corporation is statistically the best value at 4.66 times EBITDA. The Intrinsic Value(IV) of RGR is around $48-$49 that of SWHC around $14 - $16. So RGR PV/IV = $47/13.15 or 13.15/48.5 = 0.27; SWHC IV = about $14-$15 so PV/IV = $3.75/14.5 = 0.26. Both significantly undervalued; both in an IRA portfolio.

Sturm Ruger(RGR) pays a small dividend, Smith & Wesson Holding Corporation(SWHC) does not. If they were not already owned would buy more of each soon with investable cash-flow.

Kahuna, CFA
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