Fearful investing: Smith and Wesson puts the gun on the table
Today's Financial News - Posted August 24, 2009
What will the markets do now that almost all of Washington is on vacation? Finally, the markets real forces are at work. That means there is big money to be made.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): With the president hiding on an island off the coast of Massachusetts, Congress avoiding its constituents and little in the way of economic data early this week, natural forces are in control of the markets.
Here in the United States, it is all about consumer demand.
Overseas, Chinese investors are diligently calculating whether growth will clock in around 8% or reach the loftier estimates in the 10% range.
I will start on the domestic front.
No consumers have been willing to open their wallets more than the nation’s gun buyers. Ever since McCain picked up his phone and conceded to Obama late last year, gun sales have been popping. For the last ten months, shares of Smith & Wesson (NYSE:SWHC) and Sturm Ruger (NYSE:RGR) have been in high demand.
Shares of Smith & Wesson surged from a low of $1.53 to a 52-week high of $7.52, a nearly 400% move.
But the cliché tells us all good things must come to an end.
That certainly appears to be the case today as shares of the $300 million company are down by nearly 7% at the moment.
Why the sudden fall? An analyst over at Wedbush Morgan downgraded the company, citing the likelihood of declining gun sales later this year.
Of course, for TFN Strategic Trader subscribers, this is old news. We took a short position on the gunmaker a couple of months ago. Today’s news is merely the catalyst we have been waiting for.
The Asian catalyst
If you have been following the intriguing action at TFN Strategic Trader, you know I have some unique insights on China’s economic activity. For anybody with a passion for macroeconomics, the action in Asia is worth drooling over.
As Beijing sheds its dependence on the dollar, all sorts of crazy things are happening.
It just so happens one of those things is we are making money, loads of it.
On Friday, I recommended another play related to my “Commodity Carry Trade.”
Guess what… It is good for gains of 32% already!
While we are handing our subscribers ultra-quick double-digit gains, one of China’s leading retailers is handing its shareholders cold, hard cash.
China Nepstar (NYSE:NPD), the country’s largest retail drugstore operator, announced a cash dividend worth $156 million, or $1.50 per share. That is not a bad return on a share that was trading for just $6.50 a couple of days ago.
Overall, the company’s latest quarterly results were more evidence of the world’s nasty recession, but the willingness to unload a pile of cash is even more proof China’s top businessmen feel the region’s economy is on a fast-track economic rebound.
In case you have not done it yet… invest in the Chinese economy. Your portfolio will thank you.
Next Article: Is Xcellink International Inc. (XCEL) a good deal now?
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