Sounds like water penetrated the wood where the butt pad attaches to the stock. Once water and moisture penetrate the pores of wood, the wood will swell. Depending on the type of wood, sometimes the wood will shrink back to its original shape after drying, but usually once the pores have swelled open, they tend to stay like that even after the wood is completely dry. Mostly all wood will darken with water penetration, so trying to get water stains out of light colored wood will be harder than darker wood, like walnut. I'd say your stock is walnut so the water stains will be less noticable, but walnut will absorb more moisture than other hardwoods like oak, and its pores will likely stay swelled. You can definitely sand down the damaged area, but before applying any type of finish you will need to seal the pores up with a good quality sanding sealer. secondly since the pores are more absorbant in that area than the rest of the wood, you will also need to use a wood conditioner after the sanding sealer. if you plan on just touching up the damaged area, just go a little further than where the damage is, but if you plan on refinishing the whole stock, then apply the sanding sealer to the damaged area only, but apply the wood conditioner to the entire stock.
