Smith & Wesson (SWBI) is currently trading below its intrinsic value, making it a strong buy in my opinion. Despite recent negative news and a history of weak Q1 earnings, the stock shows promise for several reasons:
• Market Sentiment: While firearms often underperform during inflationary periods, the current bull market sets a favorable stage for Smith & Wesson.
• Consumer Behavior: In bullish markets, people tend to spend more on luxuries and hobbies. Firearms, as an expensive hobby, are likely to see increased demand.
• Technical Indicators: With an RSI signaling oversold conditions and support from the MA and Bollinger Bands, SWBI appears undervalued.
My Prediction:
At its current price of $11, with a fair value closer to $13, I believe SWBI has significant upside potential. However, meaningful gains may take time, with the biggest opportunities likely unfolding by mid-2025 as the company overcomes its typical Q1 challenges.
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