I know what you are thinking… But no, not those kind of gun stocks. I’m talking about the kind related to public trading.
I know we are not a politically oriented venue, but sometimes political events directly impact our realm. In this case it appears that the two main publicly traded firearms manufacturers are reporting a pretty decent amount of growth. How can we tell? Well, I think we can look back and see that record numbers of gun sales (primarily determined by the increase in the number of NICS checks) is obviously a big contributor. I would also assume that there is a corresponding increase in ammo purchasing. The New York Times has a pretty interesting timeline that illustrates current events (related to terrorism and fear of gun control) and gun sales.
This past week, Smith & Wesson (SWHC +6.1%) and Sturm Ruger (RGR +4%) soared in early trade primarily related to the speculation over the Executive Orders President Obama was expected to take.
I know a number of people “panic buy” weapons and ammo whenever there is a whiff of news regarding changes to gun laws, specifically in the United States. What is also pretty interesting is that there is a ton of stock trading going on at the same time—basically people ALSO profiting on the panic.
Now that the Executive Orders have come out (and for the most part appear to be “paper tigers”) it will be interesting to see what happens in the market specifically related to these entities. It would also be interesting to follow the stocks and see WHEN the increases start to occur; do they occur ahead of the news, when the news breaks, or in the time just after news is relayed.
Stocks to watch are:
- Smith & Wesson (SWHC; guns)
- Sturm Ruger (RGR; guns)
- Alliant Techsystems (ATK; ammo)
- Olin Corp (OLN; ammo)
- Cabelas (CAB; retailer with ~20% profit related to firearms)
- Kohlberg Kravis Roberts and Co. (KKR; retailer—owner of Academy Sports)