1. Olin Corporation (NYSE:OLN)
Number of Hedge Fund Holders: 39
Olin Corporation (NYSE:OLN) is an American manufacturer and distributor of ammunition, sodium chloride, and chlorine. Headquartered in Clayton, Missouri, it traces its origin to two companies – Equitable Powder Company and Mathieson Alkali Works – both founded in 1892. The company has three business segments, Chlor Alkali Products, Vinyls, and Winchester, with the latter focused on arms and ammunition.
During the second quarter of the year, the company generated sales worth $1.64 billion, with a net income of $74.2 million, which represented an earnings per share of $0.62. While this met analysts’ expectations, the figures were considerably low year-over-year, with 2023’s net income being $146.9 million and EPS of $1.13. The company has been navigating through several challenges, which has led to its share price drop 20% this year.
Global industrial activity continues to remain slow and subsequently, the demand for American chlorine has still not reached pre-Covid levels. On the other hand, the demand for commercial ammunition at Winchester also remained low and the rise of costs of propellants created a headwind as well. Hurricane Beryl in July this year has also been a huge setback, costing the company around $100 million, which is set to affect results in Q3.
Having said that, Olin Corporation (NYSE:OLN) is determined to adjust to market demand and challenges. It is actively focusing on cost-saving strategies, and as part of that, has already reduced its annual spending plan by $25 million. Moreover, the company has deferred its international tax payment of $80 million to 2025. These measures are likely to help improve cash flow, and the management is optimistic that its end-of-year working capital will be similar to what it was at the end of 2023. Olin Corporation (NYSE:OLN) is also optimistic about military sales considerably increasing during the second half of the ongoing fiscal year.
There is a mix of bearish and bullish opinions on the stock. However, based on Insider Monkey’s database, Olin Corporation (NYSE:OLN) is the best gun stock to buy now with 39 hedge funds owning stakes in the company. There is also a consensus among analysts on the stock’s Buy rating. In August this year, BlackRock Inc. further strengthened the bullish sentiment around the stock after it increased its total holdings in the company by acquiring an additional 333,632 shares, taking its total ownership in Olin Corporation to nearly 12 million shares.
Overall, OLN ranks first among the 9 best gun stocks to buy now. While we acknowledge the potential of gun and ammunition companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than OLN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
