The Good Ole' Boy Portfolio
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The Charlie Daniels Band song, “What This World Needs Is A Few More Rednecks”, is a starting point for what is shaping up to be a pretty darn good year for good ole’ boy stocks relating to the themes mentioned in the song; guns, pick-up trucks, Nascar and other country music themes: hunting, fishing and beer. The ‘1 percenters’ may not understand that hard workers like to play hard too. And they’re willing to spend those sweat of the brow dollars on some very discretionary items. Remember, you one percenters, as the song warns, “…there’s a whole lot more of us common-folks ... Than there ever will be of you.”
“Tryin’ To Take My Guns Away”
As the good ole boy says in the song a lot of them believe the government is going to take their away their guns which led to such demand that Sturm, Ruger & Co. Inc (NYSE: RGR) stopped taking new orders between March and May of this year. The publicly traded gun stocks have been on a tear. Ruger’s up 77% over 52 weeks and much more than that since President Obama took office. Even the tragic Aurora, Colorado shootings only drove up demand more . Ruger has pulled back some from its 52 week high of $58.42 but the company has no debt, a trailing P/E of 19.84 and quarterly revenue growth of 48.90%. It also offers a 2.70% yield. It reported after the bell on August 1 but shares plunged over 10% the next day despite handily beating the whisper number of $0.82 and coming up with $0.91 cents due to new products. The dividend will also be increased. Ruger is buying back stock and recently bought a minority stake in Kodabow, a crossbow manufacturer, in my opinion a canny move into a new space. Note that after beating by two cents last quarter the stock sold off 37% in 30 days.
The other gun company doing well is competitor Smith & Wesson Holding Corporation. It has been trading near its 52 week high of $10.25 making an enormous run from its 52 week low of $2.25. The company reported in late June and investors sure as shootin’ liked that report featuring a 28% rise in sales, the sale of the company’s perimeter security solutions unit and anecdotal accounts that more women are becoming customers. Smith & Wesson has a 40.89 P/E and a 135% backlog, but has cash of $53.38 million and debt of $53.28 million. It has a 57.60% institutional hold, 3.38% owned by insiders and a 10.60% hare of the float short.
Speculation or yield on these two, it’s your choice but more than likely both may run more into the election as gun control political discourse has been strikingly muted despite recent events.
Huntin’ And Fishin’
If you don’t want to take on any political risk from gun control issues there’s still Cabela’s Inc. (NYSE: CAB), the sporting goods retailer specializing in hunting and fishing. It has been hitting 52 weeks highs lately and the 37 stores in the US and Canada are actually tourist destinations. Every time I drive past the Cabela’s back to college for my kid, the parking lot is full with RV’s, motorhomes and cars at all hours that it’s open. Cabela’s is opening two more stores, one in Saginaw, Michigan and in Anchorage, Alaska having just opened another 3 locations. Cabela’s reported a strong Q2 on July 26 spurring a 14.5% share price surge on big volume for an overall rise of 86.93% in the stock price over 52 weeks. The P/E is 19.82 but the company has debt of almost half its cash. Over a third of the stock is held by insiders with institutions holding 64.70% and 7.10% held short.
“Yes, I Drive A Pickup Truck”
The good ole’ boys say it in the song and the companies’ trucks they buy are GM’s and Fords. Ford Motor Co (NYSE: F) is probably the bigger beneficiary as its F-series trucks have been the best selling automotive line in the US for 30 years. While both GM and Ford reported that July sales were down possibly due to the Japanese automakers finally coming back to near full production and also same old same old European troubles, but it should be noted the F-series trucks have now posted a year straight of monthly sales gains, especially the F-150 Eco Boost model. Ford now has a yield of 2.20%. Ford is trading at the lower end of its 52-week range as is GM and of the Good Ole Boy portfoiio these would be the worst performers due to their European exposure, downturn in fleet sales and the ramp up in Japanese automakers’ production.
General Motors Company reported August 2 and actually beat estimates because Europe was not as bad as expected although Q2 profits were down 41%. Analysts also expect a downturn in truck sales as consumers wait until a major model change for 2013. Like Apple customers wait for the iPhone 5, truck buyers like to wait for the first year of a model change and hold off buying the current model.
Beer And Nascar
The beer good ole’ boys drink is made by Anheuser-Busch InBev SA/NV (NYSE: BUD). Close to its 52 week high of $81.69, Bud offers 200 brands of beer and was founded in 1366 and headquarted in Belgium but good ole boys don’t care about that. You might care that the stock is up 41.62% over a year, that the quarterly earnings growth is 75.10% year over year and the yield is 1.60%. As this one has commodity costs related to grain it is good to know the company will raise prices in the fall and consumers will likely still lap it up. Bud just reported July 31 and disappointed somewhat citing costs with launching new US beers and transport charges but Motley Fool contributor Ryan Guenette believes it has the best growth of all the brewers. The company has a P/E of 19.69 but that growth and worldwide brand recognition is something the other brewers envy.
“And I’m a diehard NASCAR fan” so the song goes and Speedway Motorsports Inc. (NYSE: TRK) stock is the best play. It has a 3.70% yield. Despite a reported downturn in Nascar event attendance the stock has still risen from $11.37 to $19.22. It reported on August 1 and revenue is up at $181 million, an increase of $27 million from the prior year. The motorsports entertainment company owns eight tracks and credited extra races held during the quarter for the improvement in revenue. The company reaffirmed guidance as well albeit claiming a challenging macroeconomic environment for its fans overall.
“A Little More Respect for..The Workin’ Man”
That’s what the hedge funds and one percenters are beginning to believe the workin’ man’s purchasing power deserves and accordingly are ponying up for their portfolios. So whither the good ole’ boy trade? Guns will probably continue to be a hot sector and beer is certainly hot (but in a good way.) Cabela’s seems like a strong hold for the long term while the motor related stocks are at their lows. Nascar may be struggling but Speedway’s stock doesn’t seem to reflect it. If you believe like the song says, “ there’s a whole lot more of us common-folks” and that construction and manufacturing in the US is slowly turning around then taking a shot at the good ole’ boy portfolio for the long term could make you some beer money.
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.