Ruger's Rebound: Gunmaker Ranked No. 4 in Best Small Companies List

Here's some breaking news for you: The economy is in poor health. Stocks continue to slump. Unemployment still hovers around 8 percent. And it seems confidence in and among American workers has dipped to all-time lows.

But there is cause for hope, and you don't have to dig too far to find it. Many U.S. companies are proving that through smart business decisions, entrepreneurial instinct and good ole' American ingenuity, a business fueled by American labor can prosper even in these rough financial times.

Case in point: Southport, Conn., based gun manufacturer Sturm, Ruger and Co. Early last decade, Ruger was bleeding money. While many companies chose to capitalize on Americans' renewed interest in self-defense guns, Ruger continued with its rather dated line of revolvers and long guns. However, once CEO Michael Fifer joined the company in 2006, the tide began to change dramatically. Ruger's stock — it's been on the New York Stock Exchange since 1990 — is up 500 percent since 2008, and earlier this week, it was named No. 4 on Forbes magazine's list of the "Best Small Companies in America."

An arms maker praised by a mainstream business journal — how'd Ruger pull that off? The strategy was two-fold. Fifer stuck to a key principle established by company founder Bill Ruger Sr.: Ruger sells guns that the average American can purchase with one week's wages. But Fifer also oversaw introduction of a host of guns that historically lay outside Ruger's purview. Namely, compact, concealed-carry handguns, and shortly thereafter, an AR-15 platform rifle.

The turnaround began at the 2008 SHOT Show in Las Vegas when the company unveiled a gun that was, at the time, decidedly un-Ruger: the LCP (Lightweight Compact Pistol), a subcompact pistol packing 6+1 rounds of .380 ACP. The ensuing buzz and media attention announced to the world that a new Ruger had arrived. The company came a little late to the party, but Ruger finally had an innovative product to offer a booming market — the estimated 8 million holders of concealed-carry permits — and sales of the 10-ounce LCP were swift and immediate.

Did the coinciding spike in gun sales that resulted after President Obama's election help Ruger's bottom line? Sure, but more importantly, Ruger designed an innovative gun that people wanted and offered it at a price they could afford.

But the innovation didn't stop with the LCP; the company also rolled out ground-breaking firearms like the LCR (Lightweight Compact Revolver), the SR-556, the SR Series and the LC9 (Lightweight Compact 9mm).

"These new products are why we've left the basement of this industry," Fifer told Forbes magazine.

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That's not an overstatement. New introductions accounted for 38 percent of Ruger's sales through June 30.

According to the Forbes story, "Since Fifer took over in late 2006 Ruger's share price has jumped sixfold to a recent $49. Over the last 12 months it has netted $55 million on $406 million in revenue; half a dozen years ago it barely managed $1 million on $168 million in sales."

However, the demand for Ruger's new products has been nearly more than the company can handle. Orders poured in for 1.5 million firearms in early 2012 alone — Ruger sold a total of 1.1 million guns in 2011 — resulting in a backlog of $198.5 million worth of guns. Ruger's manufacturing simply couldn't keep pace, and in March it announced it wouldn't be accepting any new orders until June 2012. The company has since caught up with demand.

What's the future hold for Ruger? Some business analysts say no gun company can maintain its current value, arguing all have been inflated by a temporary spike in gun sales. However, other data suggests the spike is indicative of permanent growth in the firearms market, perhaps thanks to new female shooters, those who have developed an interest in personal defense and other first-time gun owners.

Whatever the size of the market, Ruger will be really challenged to continue its current rate of growth. The numbers it hit are just that good. However, it's reasonable to expect Ruger to continue its focus on innovation in the personal defense arena, while maintaining such bread-and-butter products as the 10/22, M77, Mark III and Mini-14. If Ruger's recent market instincts are any indication, this is a company that, to say the least, is headed in the right direction.

Here are some of the notable guns that facilitated Ruger's climb to prosperity: