This Just In: Upgrades and Downgrades – Olin Corporation (OLN), Smith & Wesson Holding Corporation (SWHC)

That sounds like it bodes pretty well for Olin’s CEO’s promise of “significantly” improved Q1 earnings. It suggests that the analysts’ consensus projection of only 7% next-five-years profits growth at the company — less than half what’s expected for its peers  — could be wildly short of the mark. But even if that number’s right, it’s hard to call Olin, which sells for less than 13 times earnings itself, and pays a 3.3% dividend yield, “expensive.”

And not just Olin
A second ammunition stock worth looking at — if you buy the Walmart’s pain is ammo-makers’ gain thesis — is Alliant Techsystems Inc. (NYSE:ATK) . Probably best known for its rocket engines business, Alliant actually gets  about 22% of its annual revenues from selling ammunition to sporting enthusiasts, and a further 37% selling ammo to the military.

Priced at just 8.6 times earnings today (and paying a 1.6% divvy), the stock’s being heavily discounted on fears of reduced government spending on its aerospace and military supplies franchises. But with ammunition sales going through the roof — and making up close to 60% of its annual revenues — I can’t help but think that analysts, who currently foresee only declining earnings for Alliant over the next five years, may be overly pessimistic about this one, as well.

Foolish takeaway
Personally, I’m still of the opinion that the gunmakers Smith & Wesson and Sturm, Ruger offer two of the biggest discounts to intrinsic value — and the biggest potential profits — on the market today. But the ammo makers? Olin and Alliant? If you ask me, those two look pretty cheap, too.

The article This Just In: Upgrades and Downgrades originally appeared on Fool.com and is written by Rich Smith.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Sturm, Ruger & Company.

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