2nd Amendment stocks shoot higher

With gun sales booming, Sturm Ruger and Smith & Wesson pack a punch.

By Wall St. Cheat Sheet Apr 18, 2012 12:21PM

Image: Men playing with guns (©Leander Baerenz/Getty Images)When it comes to investing, one of the most politically enhanced industries has been the gun industry.


With 2012 an election year, investors are once again focusing on gun and ammo stocks.


Earlier this year, Ammo.net looked at gun statistics since President Obama took office. The site included stats like: "January 2012: 20th straight month of firearm background check increases" and "129,166 background checks on Black Friday, most ever for a single day and a 32% increase over previous one-day record."


While Republicans and Democrats will always bicker over countless issues, there is no denying the popularity of gun stocks in recent years.


Over the past three years, shares of Sturm Ruger and Co. (RGR), the fourth largest firearms manufacturer in the United States, have surged 360%. In March, the Connecticut  company announced it was suspending new orders due to heavy demand. In a company press release, Ruger explained, "Year-to-date, the independent wholesale distributors placed orders with the Company for more than one million Ruger firearms. Despite the Company's continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity to rapidly fulfill these orders. Consequently, the Company has temporarily suspended the acceptance of new orders."


Ruger expects to resume taking new orders by the end of May 2012. The announcement sent shares immediately higher -- they are up almost 50% this year.


Meanwhile, Smith & Wesson Holding Corp. (SWHC), which has underperformed in past years, surged 80% year-to-date.


Companies with exposure to higher gun and ammo demand have also performed well. Over the past three years, shares of Cabela's (CAB) and Dick's Sporting Goods (DKS) have increased 226% and 154%, respectively. Earlier this year, Cabela's, one of the most well-known outdoor recreation brands in the world, announced plans to open new next-generation stores in Ohio, Michigan and Kentucky.


In a press release, the company explained, "Cabela's next-generation layout is designed to maximize product assortment and availability while surrounding customers in the outdoor experience with wildlife and outdoor memorabilia displays. The Columbus, Grandville and Louisville stores will feature a Gun Library, Bargain Cave and Fudge Shop, among other features unique to each location." However, not all gun and ammo related stocks have benefited from strong demand.


Despite a massive ammo order from the U.S. Department of Homeland Security, shares of Alliant Techsystems (ATK) are still down 12% this year. ATK recently announced it was awarded a five-year contract for a maximum of 450 million rounds of .40 caliber ammunition from the DHS and U.S. Immigration and Customs Enforcement. "We are proud to extend our track record as the prime supplier of .40 caliber duty ammunition for DHS, ICE," said Ron Johnson, President of ATK's Security and Sporting group, in a press release. ATK is an aerospace, defense, and commercial products company with operations in 22 states, Puerto Rico, and internationally.


Even though political rhetoric continues to fuel discussions and even fears about firearms, the right to own a gun is deeply embedded in the minds of many Americans. According to a recent Gallup poll, almost 50% of Americans claim to have a gun in their home or elsewhere on their property. It was the highest recorded level of gun ownership by Gallup since 1993.


Eric McWhinnie is an editor at Wall St. Cheat Sheet. As of this writing, he did not own a position in any of the aforementioned stocks.


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2Comments
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    This is a big win for the NRA and the Second Amendment.    In 1987 a British Firm, Tomkins Engineering bought the S & W company for US $112 Million and in 2000 went along with the Clinton Administration's call for an agreement by all firearms manufacturers to numerous safety and design standards as well as limits on the sale and distribution of their products. They were the only company to do so.

 

    The NRA and Shooting Club's country wide boycott of the company was so strong that the company had to close two plants and the S&W firearms couldn't be given away.  They stacked up on the gun shop's shelves.  The company asked the Clinton Administration to bring lawsuits against sport shops, firearms dealers and firearms rights groups.  The Anti-trust suit was dropped in 2003 and Tomkins sold the company to Saf-Te-hammer for about a third of what they paid for it.   Saf-te-hammer is trying to incorporate some of their products into the firearms.   Of course it isn't working very well or those that are purchasing the firearms today would not be willing to have them. 

 

    The more the Secular Progressive left calls for Firearms controls, the more firearms will be sold to the law abiding people of the USA.   I think we know where our bread is buttered.

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Are these Red Flag checks real when buying a car now??? If so welcome 1984 it's here...

 

AMERICA: LAND OF THE HUGE GOVERNMENT DATABASE; HOME OF THE RED FLAG RULES

The faceless bureaucrats in the Federal Government have decided to protect you from yourself again–by requiring you to answer a list of questions before you can buy your next used car or washer and dryer.

Coming soon to an appliance store or used car lot near you: The Red Flag Rules–where you have to prove you’re not a terrorist or identity thief by answering questions like how many square feet is in your house.

DBKP’s LBG has the low-down on a lowdown, dirty database.

 

 

 

Angry Over Airport Full Body Scans? On the Horizon, Red Flag Tests

Due to the new federal government mandate, Joe the used car salesman is going give you a test if you want to buy a car on credit. It’s not a test on your credit score.

Sunday News-Register, Buying a Car a Little Harder Now (emphasis LBG’s):

ST. CLAIRSVILLE – If you’re in the market for a car, be prepared to prove you are not a terrorist.

The federal government’s Red Flags Rule mandates that auto dealers, banks, credit unions and other "creditors" and "financial institutions" take additional steps to prevent identity theft and fraud, beginning Jan. 1. Included in the list of so-called creditors is your family doctor.

Among those steps is determining whether a person applying for financing – or even paying cash for a car – appears on any government watch lists of known or suspected terrorists or terrorist organizations.

As a result, consumers hoping to finance a new or used car, a home or even a major appliance will be required to supply personal information – such as their Social Security number and birth date, as well as the answers to five questions designed to confirm a customer is who they say they are – to the business at the time of the sale. Those questions could include anything from previous addresses and area codes to the names of other members of the consumer’s household.

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