By Hassan
Malik @hmalik21
It never
hurts to make a quick buck by riding the high tides of a wave that moves a
whole industry forward. The challenge is to identify that one industry making
big moves. And the bigger challenge yet is to know when to pull out of the
industry. No one wants to see the fruits of a well-performing stock diminish.
However, when the industry shows bearish signs, investors know it is time to
pull out. In recent months, larger geopolitical tensions around the world were
accounting for a drastic rise in demand for weapons. However, recent numbers
indicate that the over consuming binge is now over. Here are 3 small cap companies
that were performing well in the past couple of months but are now slumping:
Sturm, Ruger & Co. Inc. (NYSE: RGR):
This company is a prime example of why America’s gun buying binge is finished. Just
a couple of months ago, this company was reporting earnings per share in the $5
range. According to its recent Q3 reports, earnings came in at a very
disappointing $0.34, or $0.79 short of analysts’ estimates. Q3 is where the
company took a major hit. Decline in demand for its product accelerated with
sales falling 43%. Slowing demand, sales and Q3 misses has resulted in a new
52-week low for this company. Investors can expect this downward trend to continue
into 2015 as the overall industry slumps.
National Presto (NYSE: NPK):
NPK is a very peculiar case. The company is currently at a market cap of around
$412 million and is the maker of everything from small appliances to military
grenades. Its recent Q3 sales decreased 5.1% to $95.5 million from $100.6
million. What is interesting to note is that it was only the defense unit
division that saw sales increases even given a global slump. However, investors
shouldn’t get too riled up especially given the instable normality of the
company’s dividend payouts. Dividend stability isn’t quite the company’s forte.
NPK only gives one annual small dividend payout per year plus an insubstantial
smaller amount, which varies from year to year. When you consider all of
National Presto’s distributions, they often add up to a substantial portion of
the company’s earnings, raising the question of whether shareholders should
count on their payout continuing into the future.
Astronics Corporation (NASDAQ: ATRO):
ATRO follows a similar pattern to the aforementioned. The aerospace defense company
recently missed analyst estimates on its Q3 financials, however this particular
company might leave investors puzzled. As of November 12, 2014, CFO of
Astronics (Mr. David Buney) sold 4000 shares of stock at an average price of
$53.29 for a total value of $213,160. What does this stock selling by a CFO
mean? There are certainly those who might take this as a negative sign. After
all, higher-level executives know every inch of data about their companies. Is
this an early indication of a further drastic fall to come?
To see more of
Hassan’s small cap stock ideas, visit the archive here: www.smallcappower.com/experts/products/hassan-malik
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