Sturm, Ruger & Company (RGR), Smith & Wesson Holding Corporation (SWHC): Is there Money to be Made in Weapons?

Ammunition

Investing in ammunition is as simple as investing in guns. There are many manufacturers of ammunition out there but the one name that I always associate with when it comes to firing off shotguns is Winchester. Winchester is a brand owned by Olin Corporation (NYSE:OLN). The company is diversified enough that even a complete ban on guns wouldn’t mean the end of your investment.

With Olin, you’ll be getting a $1.8 billion company with a 12.45 P/E ratio that pays a 3.48% dividend yield. There is a little word of warning about this company though, it comes with quite a hefty chunk of debt at $700 million. The cash on hand is $165 million, which isn’t enough to cover debt, should they run into any severe difficulties.

No guns, no ammo

Don’t want to be in the gun game and ammo isn’t quite enough to pique your interests? How about TASER International, Inc. (NASDAQ:TASR)? That’s right, the company behind the TASER brand! TASER has a market cap right under $4 million and it could become a hot seller if gun control becomes stricter in the future.

With a P/E ratio of 26.7, TASER is a little pricy. I do however believe that their sales will pick up as Congress continues to debate gun control. TASER is one of those unique brands where the trademark becomes the name of the whole category; can you afford to pass that up?

Bottom line

Both of the two gun makers are profitable, but they are likely coming into what will be some turbulent years. Ruger is a little more profitable than Smith & Wesson Holding Corporation (NASDAQ:SWHC), so I would definitely choose that one if I were to look further into the two companies. When it comes to ammunition, Olin is priced pretty cheap as compared to the overall market but the balance sheet doesn’t make me want to run out and buy up all I can. I’d definitely stay away from this for a while, unless you think surging ammunition sales and costs could bring some much needed boosts to the company. TASER is an interesting play on the entire weapons game. It is a very powerful brand and definitely has lots of room to grow, so I think you should consider looking into it.

The article Is there Money to be Made in Weapons? originally appeared on Fool.com and is written by Ash Anderson.

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