Supreme Court’s Ruling on NYC Gun Law to Send Two Companies to the Moon

Shah Gilani Jun 24, 2022
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Hot off the presses: The Supreme Court has ruled six to three to overturn New York City’s concealed carry law, which banned those in the city from carrying of guns without a permit.

This has major ramifications on the future of gun ownership and acquisition. We could see a boom in gun sales that could take quality weapon manufacturers, like the two I discuss in today’s Buy, Sell, or Hold, to the moon. If you invest today, I expect to see a 50% gain at least, if not more within the next year.

But that’s not all I’m talking about in today’s video. I got a lot of requests this week, so let’s get started.

Give this week’s Buy, Sell, or Hold a watch by clicking the video below

 

06/24/2022 Buy, Sell, or Hold Transcript

Hey everybody! Shah Gilani here with you Friday BS.H – that’s Buy, Sell, or Hold – where I recommend what to do with stocks you ask me about during the week. Let’s take it away…

First, hot off the press on Thursday, the Supreme Court handed down a decision that essentially voids a New York City law that bans the carrying of guns in the city without a permit. Now, that has tremendous ramifications. First of all, this isn’t a firm decision in the sense that this is now law – that you can carry without a permit in New York City or anywhere. But that’s probably the direction we’re going to go with this.

What it does… It remands to a lower court, an earlier decision for further review. But with the Supreme Court making that statement on a six to three vote, it’s likely that we’re going to see easier carry permit rules around the country.

What does that mean? Well, you guys have asked me about gun companies and everybody who asked about gun companies had these two in particular on their lists:

  1. Smith & Wesson Brands Inc. (SWBI)
  2. Sturm, Ruger & Company Inc. (RGR)

First up, RGR – it’s a buy, people, and not just because of the Supreme Court ruling (which I think will cause gun sales to go a lot higher, if not explode). The company’s already looking good. Its stock is down, it’s on sale relative to its recent highs about a year ago. And some of the metrics are really fabulous. It’s a $1 billion market cap company, okay. It has about $712 million in revenue. Profit margins: 20.75%.

The thing I like most is that it’s profitable. The net income available to common shareholders – my favorite metric – is $148 million annually. What do they do with that? They pay a very nice dividend out of that. The forward dividend yield right now on RGR is 5.34%. That’s on a 42% payout ratio. That would be the principle reason. I like it with the stock down here. I love it.

Another thing that really impresses me about RGR is that they practically have no debt on their books. They’ve got $24 million in cash and only $2 million in debt. RGR has a fabulous balance sheet.

RGR is a buy down here. It’s in around $65 as I’m recording this. It had a nice pop on Thursday and I think it’s gonna continue to rise. July last year, its highs were a little over $92 and I think we can get back up there within a year – close to a 50% gain.

Take it to the bank.

Now on to SWBI. I think this company can also make a 50% move higher – and I think it can go a lot higher than that, and it pays a dividend.

This is a small cap company with a $596 million market cap and revenues over $1 billion. That’s right, a billion on a $600 million cap company. I love that right away.

Profit margins here are better than RGR with a 24.6%. Its dividend yield is 2.39%, and I really like that. It has a terrific dividend yield here and tremendous appreciation. As far as where the stock was… Back in July of 2021, similar to RGR, this stock was as high as $40. It’s trading at $14 now – which is why I think you can get more appreciation wise out of SWBI than RGR. I would probably split my capital between the two. They’re both going to be winners as far as yield.

SWBI and RGR: they’re buys.

Next up, Revlon Inc. (REV).

Wow… I got a lot to say about Revlon, but I’m going to haircut all the things I would like to say to… Suffice it to say, it’s a buy, it’s a sell, and maybe a hold. All three because it’s a trading stock.

As far as Revlon goes, declaring bankruptcy is not a reason to buy a stock – though it has worked in the case of Hertz. A tremendous example is when Hertz declared bankruptcy. The stock was down around a buck and change, now it’s trading considerably higher. The same thing could happen with Revlon, but until we know what they’re going to do – if they’re going to do anything – it’s just another good trading stock.

Right now, as far as REV goes, you buy it when it’s low, when it goes down to a couple of bucks. When it trades back up to $7-$8, you sell it. I wouldn’t short it because it can go higher. It’s one of those stocks. It’s got a tremendous amount of shorting going on. The short float before the bankruptcy was close to 40%, now it’s 39%. That means you’re going to see these tremendous POPs where we see the stock jump from $3 to $7 or $8, and then, maybe, not come back down.

When folks like the Reddit crowd jump on to short a stock en masse it affects the reliability of the trade. So, buy low and sell high.

Last but not least, energy.

A lot of energy stocks have come off and I like that fact because I am still maintaining, even though we got recession talk left, right, and center (which is why energy stocks have come down), a call on $150 WTI by the end of summer. That’s looking a bit risky right now, but I’m gonna hold onto it. We still have a chance of getting there.

I do like energy stocks. I certainly like the fact that they’re down, and one that’s been asked about a lot lately is Devon Energy Corp. (DVN). This company is a buy. It is down right now. It recently traded real close to $80 – I think $79.40 was the exact number a month or two ago. It’s now down to $54 and change.

It’s Thursday as I’m recording this and Devon is 6% off today. Not sure how it’s gonna close today, but you’re watching this Friday morning. And down here, Devon is a buy for me. It should be a buy for you, because I think it’s going to go back up. You’re gonna have the potential for appreciation back up to its highs and beyond. Potentially north of $80.

But, in the meantime, it pays a dividend. This is a very well-run company, a big one, too. Its market cap is close to $40 billion. It’s got close to $15 billion in revenue and a profit margin of 24%. It’s in the business of oil and gas, nat gas (exploration and production), and liquid nat gas for export. This is just in the right business to benefit from an exploding energy industry.

I like Devon a lot. It makes a ton of money. The net income available to common shareholders is $3.45 billion over the last 12 months. Out of that, Devon pays a very nice dividend with a trailing yield of 4.64%. That’s a great annualized yield. That’s an all-day kind of yield.

I like it here and I think Devon is gonna have special dividends. I think the annual yield, annual return on the stock (not talking appreciation), is going to be north of 5% on an ongoing basis. So, I really like DVN and down here it is a buy.

That’s all I’ve got for you this week, folks. Have a great weekend!

Cheers,

Shah

2 replies on “Supreme Court’s Ruling on NYC Gun Law to Send Two Companies to the Moon”

  1. Mary Ader says:

    Can you give me more information on why you recommend selling SBLK now? Thank you.

  2. Tom Mallen says:

    Shah,

    Don’t you also recommend options? What would be those details on the 2 gun stocks?

    Thank you,

    Tom Mallen

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