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Safety in Ammunition and Adult Diapers
09/29/2015 2:09 pm EST
When the stock market is going through a correction, safety can often be found in products that are always in demand regardless of the economy, so Matt McCall, of Penn Financial Group, highlights one company that could offer investors safety in the form of ammunition, adult diapers, and small appliances.
When the stock market is in the midst of a correction, investors tend to panic and search for safe haven investments. Safety can often be found in products that are always in demand regardless of the economy, as well as products that truly make an investor feel safe.
One such company is offering investors several products that could fall under the safe haven hashtag. Think ammo, diapers, and small appliances. National Presto Industries (NPK) is a $595 million company that has been around for over a century as a leader in the innovation of small appliances. The appliances are sold under the brand name Presto. The products range from pressure cookers to popcorn makers to the Fry Daddy.
The defense segment sells its ammunition and related products under the aegis of National Defense Corp. The products include medium caliber training ammunition, tactical ammunition, as well as less-lethal accessory equipment. The absorbent products segment sells private label adult diapers for incontinence.
From a fundamental view, the numbers have been improving with net sales during the second quarter increasing by 16% over last year. Net earnings were up 119% during the same time frame and earnings per share jumped from $0.60 to $1.31. The strong division was defense, where it saw earnings increase by 86.7% over last year.
Technically, the stock has been extremely strong, gaining 48% in 2015 and hitting a new 52-week high last week as the overall stock market struggles. The recent action has been bullish, however, the odds are investors will take some profits due to the recent outperformance. An investor looking for an entry price into the stock for the first time should concentrate on the $80 area where there is both price support as well as the 50-day moving average.
Often times it is smart to stay away from a company that has a business model that is all over the board. However, this time NPK could have it just right with its mix of products. In theory, this company makes sense to investors, as they are able to connect with the products the company is selling. While appliances may not be recession-proof, ammunition and adult diapers definitely fall into the category.
Matt McCall, Founder and President, Penn Financial Group
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