RGR (Long)...

Time to add some firepower to the watchlist with Sturm, Ruger, & Company. RGR makes guns. That's really the only introduction RGR needs. :-)

RGR has a score of 1/4, meaning one screen with strong interest and four screens with some interest (I'll adapt this convention from now on). RGR scored 100% on the Joel Greenblatt screen, 90% on the Kenneth Fisher screen, 87% on the Motley Fool screen, 85% on the Martin Zweig screen, and 74% on the Peter Lynch screen. This is another stock that's screaming growth.

Technically speaking, RGR is in an interesting spot. It's had a rough couple months, falling from a peak around $15 down out of double digits briefly. It's rallied back into double digits to start the year. The $9-$9.50 range will serve as support, as it corresponds with December's low and the high-volume low from late October. That looks to me like a selling climax in that the bears weren't able to take it below $9 that day. RGR made a run at $11 today, trying to clear both the 50-day and 200-day EMAs, but it was turned back at the lower and closed today around $10.60. Like the big bar from late October that stopped at $9, today's tail probably indicates a short-term climax, but this time it's a buying climax (these bars are called hammers; note the long tail).

I don't think RGR will be able to clear these layers of resistance easily, so I'm expecting RGR to pull back closer to the $9-$9.50 range, at which point I would start buying. Alternatively, if it did clear this resistance decisively, I would start buying.

RGR doesn't report again until late February or so. It also pays a decent dividend of ~4% annually.

RGR is optionable, but the strikes are wide, the bid/ask spreads are wide, and the volume and open interest are both pretty thin. Between the options chain and the dividend, I would be inclined to stick with common stock here instead of trying to play the options. Even with just using the common stock, we can still make a little extra money by selling covered calls against any common stock that's purchased (this is called a buy-write and it's just like the call spreads I speak of, except that instead of selling calls against other calls, you're selling calls against stock).



Position: none

Disclaimer: This is not a recommendation and is presented for informational purposes only.