Smith & Wesson rallies on solid 4Q revenue outlook

Additionally, SWHC said it will buy perimeter security firm Universal Safety Response for up to 9.7 million in shares and up to $26.2 million in cash. The acquisition is expected to be immediately accretive, excluding the purchase accounting impact on a per-share basis.

The double dose of news has propelled SWHC to a gain of more than 18% today, extending the equity's year-to-date gain of 156.4%. Today's rally has snapped the shares out of their recent slump, and SWHC could close today atop its 10-day and 20-day moving averages for the first time since May 6.

The stock's spike higher is likely attributable to a short-squeeze rally, since short interest on the equity rose by 81.2% during the past month. Now, these bearish bets account for a healthy 11.8% of SWHC's available float, which translates to roughly a week's worth of buying pressure at the stock's average daily trading volume.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.