Will Starbucks policy boost gun stocks?

A welcome to open-carry advocates may not help the coffee chain. But acceptance of sidearms is good for gun makers.

By Jamie Dlugosch Mar 1, 2010 10:45PM

Johnny Cash wondered about the wisdom of a young farmhand’s journey to town with his gun by his side in the song, “Don’t Take Your Guns to Town.”

 

So I have to wonder what the Man in Black would think of those taking their guns to Starbucks?

 

We're not in the Wild West anymore and they're unlikely to be used, some would say. Others would say that's why sidearms aren't needed.

The question's getting a lot of discussion and debate online as gun owners nationwide test a variety of open-carry laws, some of which allow businesses to ban them. According to an Associated Press report, California Pizza Kitchen and Peet's Coffee & Tea are among the businesses that have banned customers with guns.

 

Starbucks hasn't.

 

Starbucks said in a recent statement that it follows state and local laws and has its own safety measures in its stores.

 

It's far from clear whether that will help Starbucks (SBUX) business, but gun makers like Smith & Wesson (SWHC) are no doubt thrilled. Such a stance is good for them.

 

 

Proponents of open-carry laws, in addition to advocating for the Second Amendment, will argue that guns so openly displayed deter crime. Gun-control advocates would likely disagree.

 

I won't solve that debate in this blog item. No, wearing a gun didn't save the kid in the Johnny Cash song. But in 2009, a year that saw an increase in gun sales, violent crime dropped.

 

It is a complicated issue.

 

But from a stock perspective, the idea of open-carry laws making people more comfortable with carrying weapons seems very bullish for gun makers Smith & Wesson and Sturm Ruger (RGR) in the short term.

 

Both of these stocks have been stuck in the mud for much of the past year despite rising gun sales. SWHC is down from a peak of $7.52 and now trades for just over $4. RGR is down from its 52-week high of $15.20 to just under $12 today.

 

From a valuation perspective, both of these companies are attractively priced for long-term gains. Those gains will be much quicker if gun-control noise begins emanating from Washington.

 

I expect both of these stocks to trade higher. I expect these 10 stocks to trade higher, too.

 

Related articles:

 

214Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
274
274 rated 2
447
447 rated 3
698
698 rated 4
633
633 rated 5
652
652 rated 6
650
650 rated 7
491
491 rated 8
268
268 rated 9
125
125 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.