Aaron is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Sturm, Ruger, & Company (NYSE: RGR), better known as Ruger, is based in Southport, Connecticut and manufactures rifles, pistols, revolvers, and shotguns. 2012 Q3 data showed a 2.49% net profit margin increase over the same period last year. From this time last year stock is up $12.86 (30.77%) and that is with incredibly large dividend pay out. On November 19'th of 2012 the board of directors for Ruger declared a special cash dividend of $4.5 a share to be paid on the 21'st of December. Considering at the date of declaration the stock was $48.57 and $4.5 at that point equaled nearly 10% of share price there was some serious confidence on the part of the board. Michael O. Fifer, the CEO of Ruger, is quoted on the Ruger Corporate site saying, "This special dividend reflects our confidence in the future to be able to pursue good opportunities that come our way."
From the date the dividend was declared till to Dec. 4 the stock rose $10.83 (22.52%). At that point the dividend took effect on stock prices and signaled the beginning of a sell off. Not long after tragedy struck which stirred the conversation of gun control and became the second contributing factor in a $17.98 (30.69%) sell off from between Dec. 4, and Dec. 18 of 2012. However, since then, the stock price has increased $10.66 (24.23%) to $54.66 which is $5.45 (9.97%) off $60.11, 52 week high.
Having covered the fact that Ruger has made serious gains through recent tumult the following is why it will rise in value. The demand for Ruger's products is massive. At one point last year Ruger stopped taking new orders, and that was before the gun control conversation really began. Now it has become even harder for a seller to stay stocked and the manufacturer to keep up. With this in mind Q4 earnings, which will be reported in 5 days, should eclipse that of Q3. Will the profit margin be higher than 2.49%, likely but the volume will surely be up. Keeping the effects of the upcoming earnings report in mind there will also likely be a rise in value running up to the reports.
My goal is not to give advice to anyone to buy or sell stock, it is to educate, provoke conversation, and entertain. Thank you for reading.