Smith & Wesson now sees its April quarter sales around $129 million versus the consensus of $119.8 million and versus its prior range of $113 million to $118 million.

The company’s preliminary firearm order backlog increased to about $439 million, up about 135% versus a year ago and up about 121% sequentially.  Ongoing strength in pistols and modern sporting rifles helped, as did a successful product launch.

No one wants to admit it this, but it seems as though gun demand may be running cyclical around election cycles as well.  Smith & Wesson shares are up over 5% at $6.59 versus a 52-week range of $2.29 to $8.62; Sturm, Ruger & Co. Inc. (NYSE: RGR) is down by over 5% at $40.13.  The difference between the two companies in size is that Smith Wesson is worth $428 million and Sturm Ruger is worth $768 million in market cap.

Alliant Techsystems Inc. (NYSE: ATK) has other operations tied to defense and space launches, but it is the leader in bullet manufacturing. The group’s products include brands such as Federal Premium, CCI, Speer, RCBS, Alliant Powder, Champion, Weaver, Eagle Industries, and Blackhawk! Industries. Alliant’s shares are up only 0.1% at $51.83 today and the 52-week range is $48.00 to $72.84.

Dirty Harry… “Well, we’re not going to just let you walk out of here.” Who’s We? “Smith, Wesson and me”

JON C. OGG

Read the 100 Best Small Companies in America

The initial list based on the universe of public corporations with less than $1 billion in revenue. These companies are among the best for their size because they have increased revenue over the period covered by our analysis. Their relatively small sizes and robust sales expansion rates also makes it likely many will continue to grow even further, if the record of public company expansion is any example.  Past growth does not mean all of these firms will prosper, but most on this list have been consistently profitable, which adds to the chances of future progress.

Small companies, our research shows, usually have one or two specialized divisions and are focused on one core market. For instance, Steve Madden, True Religion and rue 21 have all carved out a niche segment in the apparel and footwear market. Their lack of diversity could be a drawback because the companies rely completely on one set of products, but it can also mean that management can be laser focused on a single opportunity.

Another industry which is well represented on this list is niche healthcare. Once again, most of the firms in this sector which made the list are in only one business. Mesa Labs makes manufacturing quality control products for medical devices. It is a narrow market, and there is no guarantee that a large device manufacturer might not attack the same sector. Bio-Reference Laboratories provides testing services. Cantel Medical provides infection prevention and control devices. This infection prevention business appears to be a relatively small one, but the overall medical industry in the US is expanding at such a rapid rate and regulations are changing so quickly that some of these companies will prosper because of these changes. Given the state of American healthcare costs, not many people would be surprised to see healthcare firms on a list of fast growing companies

These corporations are also often willing to take calculated risks, in some case, as they strive to expand their bases. Retailers are a good example.  Steve Madden, one of our companies, was started in 1990 with $1,100. The company has consistently added lines of apparel since then to increase revenue

Another reason to create this list is that 24/7 Wall St. recognizes that smaller companies continue to be a backbone of job growth. Corporations that are highly successful are roadmaps for the sort of industries, managements, and products and services which have done well recently. As recent access to capital has improved compared with access during the recession, well targeted and well run smaller businesses stand a much better chance of doing extremely well because they can tap pools of funding.   Methodology: We ranked these companies largely based on their growth rates as well as on how they have performed financially in the recent past. The pace of these growth rates allowed us to make a final selection and rank the companies when growth was combined with eight other categories. The 100 companies on our list had a median 20% sales growth and 30% earnings per share growth over the last 12 months. Similarly, the median stock price return for the latest year for this group was 16%, which is double the return of the S&P 500 index over the same time.

While stock market performance is one of our ranking criteria, we did not remove companies for poor performance because smaller companies tend to have greater price swings than the overall market. We should point out that this is not an investment list for value seekers. Maintaining these lofty growth rates is not an easy task.

S&P Capital IQ  provided us with corporate information, financial data and rankings based on a series of metrics. We started with a universe of 1,200 publicly traded, small companies, which we defined as having between $5 million and $1 billion in revenue over the last 12 months. To narrow this group down, we required that sales growth, earnings per share growth and return on equity to be greater than zero for both the latest 12 months and over the companies’ last five fiscal years. We also excluded companies whose stock price is lower than $5.This brought the size of the list to 164

The criteria we used to allow us to winnow the list to  100 companies  based on a few items which included stock price. We then assigned a rank based on all of the above growth metrics and stock price returns over one and five years. For companies whose shares were not traded for five years, we used annualized figures from their first trade date. From these category rankings, each company was given an overall score that was used to produce the list.

Brian Zajac

The financial data below is from the latest available reporting period and price change is as of March 21, 2012.

The unofficial closing bells put the DJIA down more than 78 points to 13,046.14 (-0.60%), the NASDAQ fell 12 points (-0.39%) to 3,063,32, and the S&P 500 fell -0.72% or about 10 points to 1,392,79.

There were several analyst upgrades and downgrades today, including Exxon Mobil Corp. (NYSE: XOM) raised to ‘neutral’ with a $92 target price at JPMorgan; Western Digital Corp. (NYSE: WDC) raised to ‘strong buy’ at Needham; Rackspace Hosting Inc. (NYSE: RAX) cut to ‘neutral’ at Goldman Sachs; Annaly Capital Management Inc. (NYSE: NLY) cut to ‘underperform’ at Sterne Agee; and Emerson Electric Co. (NYSE: EMR) raised to ‘buy’ at Nomura.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: BankAtlantic Bancorp Inc. (NYSE: BBX) is down -1.7% at $3.97; ConAgra Foods Inc. (NYSE: CAG) is down -0.6% at $26.21; Gamestop Corp. (NYSE: GME) is down -6% at $23.17; IHS Inc. (NYSE: IHS) is down -4.9% at $92.89; Lululemon Athletica Inc. (NASDAQ: LULU) is up 2.9% at $76.20 after posting a new 52-week high of $76.66 earlier today; Perry Ellis International Inc. (NASDAQ: PERY) is up 3% at $18.42; Sonic Corp. (NASDAQ: SONC) is down -6.8% at $7.50; and The9 Ltd. (NASDAQ: NCTY) is down -5% at $7.01.

Other standouts from today include the following stocks:

Dollar General Corp. (NYSE: DG) is up 3.33% at $46.24 after posting a new 52-week high of $46.95 earlier today. The discount retailer posted better than expected earnings results. More coverage here.

Discovery Communications Inc. (NASDAQ: DISCA) is down -0.35% at $48.16. The cable network may take a big loss its investment in the Oprah Winfrey Network. More coverage here.

Sturm, Ruger & Co. (NYSE: RGR) is up 13.4% at $47.95 after posting a new 52-week high today of $48.24. Smith & Wesson Holdings Co. (NASDAQ: SWHC) is up nearly 14% at $7.84 after posting a new 52-week high of $8.00. The gunmakers are rising on Ruger’s announcement that it will not be accepting any new orders until May because it is fully booked. More coverage here.

Banc Trust Financial Group Inc. (NASDAQ: BTFG) is down more than -18% at $1.22. The bank holding company warned on earnings this morning. More coverage here.

Diamond Foods Inc. (NASDAQ: DMND) is down -8% at $23.59. The snack food maker is suspending its dividend. More coverage here.

Stay tuned for Friday. Federal Reserve Chairman Ben Bernanke, Atlanta Fed President Dennis Lockhart, and St. Louis Fed President James Bullard are giving speeches. We have also noted the following event on the schedule (all times Eastern):

• 10:00 a.m. – New home sales

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Paul Ausick

In its statement, Ruger said:

• The Company’s Retailer Programs that were offered from January 1, 2012 through February 29, 2012 were very successful and generated significant orders from retailers to independent wholesale distributors for Ruger firearms.
• Year-to-date, the independent wholesale distributors placed orders with the Company for more than one million Ruger firearms.
• Despite the Company’s continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity to rapidly fulfill these orders. Consequently, the Company has temporarily suspended the acceptance of new orders.

Investors obviously think that Smith & Wesson can fill the gap. Shares are up about 12% at $7.70 after posting a new 52-week high of $7.82 earlier today. The stock’s 52-week range is $2.29-$7.82.

Ruger’s shares are up more than 8% at $45.92 after it, too, posted a new 52-week high of $46.78. The stock’s 52-week range is $18.65-$46.78.

The Brink’s Company (NYSE: BCO), Command Security Corp. (AMEX: MOC), Corrections Corporation of America (NYSE: CXW), The GEO Group, Inc. (NYSE: GEO), Smith & Wesson Holding Corporation (NASDAQ: SWHC), Sturm, Ruger & Co. Inc. (NYSE: RGR), and TASER International Inc. (NASDAQ: TASR) are just some of the key companies that investors have to choose from when it comes to the safety of America.  We wanted to take a look at where these shares trade, what they are worth, and even if those crazy Wall Street analysts think they are good investments or not based upon consensus Thomson Reuters price target data.  We have not included the Homeland Security winners as those companies are motivated by a different issue.

The Brink’s Company (NYSE: BCO) may be considered more of a transportation company, but if the world was full of a bunch angels then it would not be needed.  The company is perhaps the world’s top provider of secure transportation and cash management services.   Banks and merchants have to secure, cash, jewelry, stones, and other small precious and valuable goods because there is an element of society that will literally kill for those goods.  This armed and secure transportation services operation trades with shares at $27.64 and its market capitalization is close to $1.3 billion.  Its 52-week trading range is $18.30 to $34.46. Sales in 2010 were $3.12 billion and Thomson Reuters sees 2011 revenues of $3.76 billion.  The consensus price target is roughly $36.00.

Command Security Corp. (AMEX: MOC) may have some overlaps that are not solely law enforcement, but this is a private security company with Rodgers Police, with over 6,000 armed and unarmed workers for the Secret Service, Fortune 1000 companies, and other government and/or private entities.  The difference here is that this company is tiny compared to peers/  It sometimes skips trading days.  At $1.59 it has a market cap of about $17.5 million and its 52-week range is $1.45 to $2.47.  Revenues in 2010 (March year-end) were over $145 million.  Unfortunately, this one just lost its CEO. This one is too small for most firms to cover it. 

Corrections Corporation of America (NYSE: CXW) is where you end up after being a bad boy and when you big ambition of life was “three-hots and a cot.”  The company owns and operates privatized correctional and detention facilities  in America. Only the federal government and three states have more facilities than the “Con Hotel” of Corrections Corporation with some 66 facilities that include 45 company-owned facilities with a total design capacity of approximately 90,000 beds in 19 states and the District of Columbia.  At Revenues in 2010 were 1.68 billion and Thomson Reuters has estimates of $1.73 billion for 2011 sales.  At $22.79, its 52-week trading range is $18.19 to $26.89 and its market capitalization is over $2.4 billion.  The consensus price target is roughly $30.00.

The GEO Group, Inc. (NYSE: GEO) competes with Corrections Corp. as it provides outsourced services managing correctional, detention, and mental health and residential treatment facilities in the United States, Australia, South Africa, and the United Kingdom.  At $24.58, the market capitalization is about $1.58 billion and the 52-week range is $19.01 to $25.95. Sales in 2010 were $1.27 billion and Thomson Reuters expects sales of about $1.64 billion in 2011.  The consensus price target is roughly $31.17.

Smith & Wesson Holding Corporation (NASDAQ: SWHC) and Sturm, Ruger & Co. Inc. (NYSE: RGR) are two of those companies which live on both sides of the ‘crime and defense sector’ when you think about it.  The arguments for and against guns are many, but crime and public-defending cannot go without bringing in the gun manufacturers.  The companies probably do not want this addressed too much, but whether you are cop or a hardened con chances are that you are packing a gun from one of these two companies or from their rivals.  Smith & Wesson trades at $3.45, has a 52-week trading range of $3.27 to $4.60, and has a market cap of about $208 million. S&W’s sales in 2010 (different fiscal year, April) over $406 million and Thomson Reuters sees sales of over $390 million in 2011. Strum Ruger trades at $20.73, and its 52-week range is $12.66 to $24.05 with a market cap of about $395 million.  Sales in 2010 were $255.2 million and Thomson Reuters sees sales of over $278 million in 2011.  Let’s not forget about home security operations as well.  The consensus price target for S&W is roughly $5.02 and the consensus price target for Sturm, Ruger is roughly $25.00.

TASER International Inc. (NASDAQ: TASR) is a controversial company because its Tasers (stun guns) have been the subject of many wrongful death suits against police departments and around the devices.  What is amazing is that the one feature is rarely addressed publicly… Police sometimes have to use force.  When you are attacking the police, or when you are resisting arrest and cannot be reasoned with that you have to go to the clink, would you rather have your head bashed with a baton, would you rather have a hollow-point-.44 enter your chest and exit your back the size of an orange, or would you rather be tasered?  At $4.48, its 52-week range is $3.52 to $5.17 and its market capitalization is approximately $270 million.  The company is now expected to run at profitability.  Sales in 2010 were $86.9 million and Thomson Reuters expects sales of over $98 million in 2010.  The consensus price target is roughly $5.17 but it is thinly followed.

Not including some of the defense companies and others like Tyco International Ltd. (NYSE: TYC) and Honeywell International Inc. (NYSE: HON) and Diebold, Incorporated (NYSE: DBD) makes this feel very incomplete, but we wanted to focus on pure-plays in security, weapons, prison, and others.  There are also dozens of OTC or Pink Sheet stocks that can fit in the category of crime and punishment, but we usually refrain from covering such small companies.
 
JON C. OGG

It seems that both Smith & Wesson Holding Corporation (NASDAQ: SWHC) and Sturm, Ruger & Co. Inc. (NYSE: RGR) would be happy that they have one fewer public gun company to compete with.  Still, it is not as if Remington and the other brands under Freedom have not already established market share.  Neither stock is up so far today either.

Freedom Group did not offer up a reason for the withdrawal.  It would be easy to speculate about the cases involving instances where Remington guns have reportedly misfired.  Whether that is the case depends upon which side you are on and we will leave it at that.  The only explanation is as follows:

• “At this time the Company has determined not to proceed with the initial public offering contemplated by the Registration Statement. The Registration Statement has not been declared effective by the Commission and the Company hereby confirms that no securities were sold in connection with the offering described in the Registration Statement. Therefore, withdrawal of the Registration Statement is consistent with the public interest and the protection of investors…”

What is  interesting is that the filing advised the SEC that it may undertake a later private offering.

Smith & Wesson Holding Corporation (NASDAQ: SWHC) has a market cap of $212 million and its sales in 2010 (April-year) of $406.1 million.  Sturm, Ruger & Co. Inc. (NYSE: RGR) has a market cap of $430 million and its 2010 sales were $255.2 million.

JON C. OGG

That was then. Now, firearms makers are having a tougher go. Smith & Wesson Holding Corp. (NASDAQ: SWHC) reported weak first-quarter 2011 earnings today. In July, competitor Sturm, Ruger & Co. Inc. (NYSE: RGR) reported lower revenue second-quarter revenue and earnings. Alliant TechSystems Inc. (NYSE: ATK), the largest ammo maker in the US, reported strong sales in its security and sporting group for its first quarter of 2011. Even stun-gun maker Taser International Inc. (NASDAQ: TASR) had a poor second quarter, though it surpassed EPS loss estimates of -$0.03 by a penny.

As with so many things these days, US gun sales have followed the economic outlook. In the first half of 2009, when doom and gloom about the economy was very high, gun sales soared as people bought firearms for personal protection, fearing that unemployment would lead to a rise in crime.

Those fears haven’t panned out. The FBI’s preliminary report for 2009 on US crimes begins by noting that violent crime fell by 5.5% in 2009 compared with 2008. Property crimes also fell, buy 4.9%.

Depending on which side of the gun-control issue one believes, the drop in numbers means either that a well-armed citizenry prevented crime or that gun buyers wasted their money.

Yet any way one looks at it, guns and ammo sales are up. The FBI’s National Instant Check System and payments to states from federal excise tax collections on sales of guns and ammo are up more than 25% in FY 2010, to more than $470 million. In August 2010, the FBI has conducted more than 1 million background checks, and 2010 is on a pace to meet or, more likely exceed, the 14 million background checks completed in 2009.

S&W shares are down nearly 9%, back up slightly after hitting a new 52-week low earlier this morning.

Paul Ausick

We have provided the news or reason behind the move, as well as background data and added color on each where applicable.

Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) is trading up after the company licensed its obesity and weight loss drug to Eisai.  Shares closed at $3.07 yesterday and are up 15% at $3.53 on close to 300,000 shares.

Dendreon Corp. (NASDAQ: DNDN) is getting clipped aggressively this morning after the U.S. government said it will review whether PROVENGE for prostate cancer is reasonable and necessary.  This is a move meant to drive down the reimbursement rates after the price tag is so high.  Shares are down over 15% at $27.47 on over 500,000 shares. This will be one of the day’s most active stocks for sure.

Isle of Capri Casinos Inc. (NASDAQ: ISLE) is surging this morning on news that it halted a 9 million share secondary offering due to adverse stock market conditions.  Shares are up more than you might expect on the news as the stock is up over 13% at $10.50 on about 25,000 shares.

Research in Motion Ltd. (NASDAQ: RIMM) is down 0.5% this morning and\has put in yet even newer 52-week lows… Stocks hitting 52-week lows tend to keep hitting 52-week lows.  $50 was violated yesterday, now $49 is being violated this morning.

Smith & Wesson Holding Corporation (NASDAQ: SWHC) is on the move after its lower quarterly earnings were actually above estimates and after its outlook pleased investors.  Dirty Harry would be proud.  Shares of the gun-maker are up over 7.5% at $4.40 on about 20,000 shares.  The 52-week range is $3.75 to $6.98 and average shares per day is over 1 million.  Look for volume to pick up as the open gets closer.  Sturm, Ruger & Co. Inc. (NYSE: RGR) is the other player in guns, but no trades have been seen there yet.

TASER International Inc. (NASDAQ: TASR) seeing 52-week lows and is not feeling much love after it lowered estimates.  Shares are trading down just over 10% at $3.50 on about 10,000 shares.  The prior 52-week range was $3.79 to $7.88 and it trades about 1.1 million shares on average.

Yahoo! Inc. (NASDAQ: YHOO) is indicated higher, although on somewhat thin trading volume.  The lagging internet giant has authorized a new repurchase plan for shares up to $3 billion over the next three years to replace its prior $3 billion plan.  The prior plan had only about $300+ million remaining on it.  Shares are up 1.1% at $13.99 on only about 30,000 shares.

JON C. OGG

Smith & Wesson Holding Corp. (NASDAQ: SWHC) is off 12% on earnings and guidance; we’d watch for added fallout in Sturm, Ruger & Co. Inc. (NYSE: RGR).

Take-Two Interactive Software (NASDAQ: TTWO) is down 20% on its warning.

Bank of America Corp. (NYSE: BAC) is trading down 1.7%, but not as much as the deal price, after increasing its capital raise.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is at new 52-week highs after higher earnings and higher guidance.  We’d watch Broadcom Corporation (NASDAQ: BRCM) and Texas Instruments Inc. (NYSE: TXN) on the news.

Facet Biotech Corporation  (NASDAQ: FACT) is down slightly despite a boosted buyout offer.

Sun Microsystems, Inc. (NASDAQ: JAVA) is up over 5% on a report that the EU may be flawed and/or appeased in its block of the Oracle deal.

You can join our open email distribution list to hear more news on key analyst calls, top day trader alerts, mergers and acquisitions, Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

The Obama Adminstration has levied huge import tariffs on Chinese tires claiming that they are exported to the US in a manner which damages the American tire industry unfairly.  Did President Obama just say “Blue Horseshoe loves Goodyear Tire & Rubber Co. (NYSE: GT)” in this call?  You might as well call this the Goodyear gift… You can also look for a benefit for Cooper Tire & Rubber Co. (NYSE: CTB) as well.  Just be advised, this tariff game is a knife which cuts both ways and the one doing the stabbing here often has to get stitches put on some wounds too…. We would also note that that the Cooper Tire pension plan just filed on Friday to sell some 1.5+ million shares of common stock.

Grand Canyon Education Inc. (NASDAQ: LOPE) is on deck with a secondary offering.  The company is selling six million shares expected to price as soon as Monday, although there is a discrepancy as the original filing was for 8 million shares, only 1 million of which were going to be from the company with the rest from private equity holders, but the new indication is a secondary offering of 6 million shares.

On Wednesday we have the return of a top American brand that is no longer American.  In some form, you can say that Budweiser is an import despite the notion that it is still brewed here.  But AB InBev, or Anheuser-Busch, is finally returning to America as a stock.  It is even taking back the old stock ticker of “BUD”…

Sprint Nextel Corp. (NYSE: S) may come under attack of a Deutsche Telecom (NYSE: DT) buyout offer if the reports are as advanced as they would lead you to believe.  This would come as almost no surprise other than the notion that it just has never happened.  And with our US dollar getting shelled it makes only more sense that a foreign company would look at this brand to rake in more than 30 million subscribers.    As our friend Joe Kunkle over at OptionsHawk.com said to us, “Very interesting considering that on September 4th, 170,000 call options traded with huge buying of the October $4 calls that traded more than 70,000 contracts.  There was also a lot of traders putting on bullish risk reversals, selling puts to finance the purchase of calls.” In short, Joe is saying that there is some large cash that was quietly put behind this notion.  We would look for a large pop in Sprint shares in the early trading hours Monday unless this is denied.

We have several key earnings this week.  Best Buy Co. (NYSE: BBY) is on deck for earnings on Tuesday, and we have a full preview for the top earnings this week so we can get an idea of just how well the technology and electronics spending by Joe Public is and if it justifies the huge jump this stock has made.  Larry Ellison and friends over at Oracle Corp. (NASDAQ: ORCL) have the CRM giant’s earnings after the close on Wednesday.  Palm, Inc. (NASDAQ: PALM) is going to be on deck Thursday for earnings.  While we would love to be overly cautious here, there is a problem in just panning it blindly because of the short interest.  If our fully diluted calculations are correct, there is roughly 40% of the float short in this one.  Here is a full preview on each of those with the formal estimates as well as much added color for what else to look for.

We hate to single out a commodity ETF as a key stock to watch for the week, but the SPDR Gold Shares (NYSE: GLD) is the most direct trading vehicle on the price of gold as it is solely a bet on the price of gold bullion.  About a week ago, our friends and affiliate over at INO.com made the call with some conviction that Gold was not just going to bust above $1,000.00… but could likely jump much higher in a power-band move.  We are awaiting an update to the call, mainly because this did finally get above $1,000 last week and stayed above $1,000 for the closing price.  The problem is that once that happened there was no major screaming inflows on the shiny yellow stuff to drive it immediately higher.  This will likely be the week that determines the fate of gold for the near-term and the GLD is the easiest way for Joe Public to play it long or short.

Rails need to play catch-up…. When a company the size of FedEx Corporation (NYSE: FDX) raises guidance, we generally expect to see a rally in the other modes of the transportation sector.  That happened in FedEx’s top competitors and it happened in trucking, but the rail giants of  CSX Corp. (NYSE: CSX) and Union Pacific Corp. (NYSE: UNP) were very weak and actually closed down here.  While these are not direct overlays on each other, there is still some delayed correlation here.

Another secondary trade is after Smith & Wesson Holding Corp. (NASDAQ: SWHC) had a good week after blowing away earnings, although the stock did not have a day-two follow-on rally.  It still posted over a 10% gain on the week.  But Sturm, Ruger & Co. Inc. (NYSE: RGR) actually closed down and the only little bump up it had was early on Thursday before getting rifled lower.  There should be and generally is more correlation here than what we saw this week, so watch RGR for a possible under-covered secondary catch-up trade.

You can always join our open email distribution list if you want to be notified of the unusual suspects, key analyst calls, Buffett and other guru investor activity, M&A, IPO’s and more.  This is our first full week back now that Labor Day has come and gone, so that means that the trading desks will be fully staffed and all players will be back.

JON C. OGG
SEPTEMBER 13, 2009

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