Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
VIX is Reversing, Other Stock Market Indicators are Faltering - 28th Nov 14
Will The Swiss People Resist The Massive Anti-Gold Propaganda? - 28th Nov 14
Dramatic Increase in Gold Flows into China - 28th Nov 14
Britain's Immigration Catastrophe Continues, David Cameron's Impotent Speech on Stopping In Work Benefits - 28th Nov 14
Netherlands, Germany Have Euro Disaster Plan - Possible Return to Guilder and Mark - 28th Nov 14
Russia’s Gold Monetary Solution - 28th Nov 14
British Government Publishes UK, Scotland DevoMax Smith Report Suicide Note - 28th Nov 14
The Price Of Oil Exposes The True State Of The Economy - 27th Nov 14
Brazilian Bovespa Stock Market Technical Analysis - 27th Nov 14
Gold Price Would Soar on Possible Swiss Yes Vote - 27th Nov 14
Crude Oil Asset Bubble Trouble - 27th Nov 14
Thanksgiving and Puritan Geopolitics in the Americas - 27th Nov 14
The Dow Jones Stocks Index - Beautiful Tree in the Desert - 27th Nov 14
The Digital World, The Opiate of The People - 27th Nov 14
Harry Dent's Simple Strategy for Surviving Withdrawals from Markets on Crack - 27th Nov 14
Socialist France Just Cannot Compete Against Google Freedom - 27th Nov 14
A Short Tale About the Grand Manipulation of Crude Oil Prices - 26th Nov 14
China Secret Gold Buying ... How Could It Happen? - 26th Nov 14
Gold Price Spikes to $1,467.50/oz on Computer Glitch? - 26th Nov 14
Gold - So Bad It's Good: Surviving 2014 - 26th Nov 14
TrueShopping.co.uk Real Customer Experience Review - Online Shopping Lessons - 26th Nov 14
Is There A New Global Consensus About Cheating Investors To Reboot Employment? - 26th Nov 14
EUR/USD – Currency Bulls Don’t Give Up - 26th Nov 14
Swiss Gold Referendum A Golden Opportunity for Switzerland - 25th Nov 14
Silver: What COT Analysis Tells Us - 25th Nov 14
Stock Market Big, Bold and Ugly - 25th Nov 14
U.S. Dollar Near Top? Gold and Silver Trading, Platinum Breakout Invalidation - 25th Nov 14
Buy Fear - Easily Pick Up Profits on Stock Market Dips - 25th Nov 14
The Islamic State Reshapes the Middle East - 25th Nov 14
Gold Price Forecast 2015 - 25th Nov 14
The Swiss Referendum On Gold: What’s Missing From The Debate - 25th Nov 14
Clash of Generations - Why Millennials Still Live at Home; Not Jobs, Student Debt, or Housing - 25th Nov 14
Stock Market Reminiscent of Pompeii - 25th Nov 14
Once Upon A Time There Were Philosopher Kings - 24th Nov 14
The 2014 Crude Oil Price Crash Explained - 24th Nov 14
China Stock Investing - Follow the Money! - 24th Nov 14
122 Tonnes of Gold Secretly Repatriated to Netherlands - 24th Nov 14
What Causes the U.S. Dollar to Move? - 24th Nov 14
Stock Market Indexes New Highs - Will Uptrend Extend Even Further? - 24th Nov 14
All Hail the King U.S. Dollar - Trend Forecast - 24th Nov 14
Where Is China Economy On The Map Exactly? - 24th Nov 14
Most of The World Economies Panic - Is The US Next? - 24th Nov 14
Stock Market Exhaustion Gap? - 24th Nov 14
Gold Golden Gains Come After The Pain - 24th Nov 14
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

Election Politics and Economic Uncertainty Means It's Boom Times for Gun Stocks

Companies / Investing 2012 Apr 11, 2012 - 06:31 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleDon Miller writes: The gun business is booming.

Uncertainty about the upcoming election and a sluggish economy has Americans buying guns and ammo by the truck load.

In fact, business is so good they can't make enough of the stuff.


Even though actual sales data is hard to come by, the industry's biggest players are saying business has never been so good.

Gun stocks are up big as a result.

"Many indicators, including a record-setting 2011, show the firearms industry continues to thrive in a down economy and that the potential exists for another strong sales year in 2012," the National Shooting Sports Foundation (NSSF) said at its annual trade show.

The NSSF said that 920,840 instant criminal background checks were made in January, an unprecedented 20th-straight month of year-over-year increases. The January number comes on the heels of nearly 1.5 million checks in December -- the most ever for any month.

The actual number of guns sold is often much higher, as private transfers and sales from gun shows are exempt from background checks.
In fact, one major manufacturer reported that business is too good.

Sturm, Ruger & Co. (NYSE: RGR) said it received orders for more than one million units in the first quarter, forcing the company to stop accepting new orders.

"Despite the company's continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity...consequently, the company has temporarily suspended the acceptance of new orders," CEO Michael O. Fifer said in a statement.

Here's what's fueling the feeding frenzy in firearms...

In good times and bad, sales of firearms have proven steady and relatively immune to the economic cycles that trouble other industries.

But nothing fuels gun sales like uncertainty, and nothing fuels uncertainty like an election--- especially one that puts a Democrat in the White House.

Whether that's rational or not, firearm sales increased dramatically in the wake of the financial crisis in 2008 and as Barack Obama took office in 2009.

"People were rushing out to buy guns, because they were worried [President Obama] was going to take their guns away," William J. Vizzard, professor of criminal justice at California State University told the Huffington Post. "He didn't have a single proposal on the table for gun laws. It defies reason. It's a culture unto itself."

Now, Americans are once again scrambling to buy guns on fears that the president will be reelected. They reason that as a second-term president, he will be free to impose new restrictions on firearms without having to worry about getting re-elected.

In fact, according to National Rifle Association (NRA) President Wayne LaPierre, the administration's policies are "part of a massive Obama conspiracy to deceive voters and hide his true intentions to destroy the Second Amendment during his second term."

For decades, the NRA has been beating the drum of individual gun ownership as a sacred part of American freedom, wielding its power in Washington to beat back proposed restrictions on the right to bear arms.

The general state of the economy is also helping to boost gun stocks.

Americans are constantly bombarded with media reports of doomsday scenarios, dollar devaluation and economic chaos.

Many take this end-of-the-world scenario very seriously, and are arming themselves to the teeth to protect themselves.

"Indicators reveal growing interest among citizens, particularly women, in owning a firearm for personal and home protection," the NSSF noted in its statement.

Investing in Gun Stocks (RGR, SWHC)
With customer demand exploding, the firearms market represents a tantalizing opportunity for investors.

Unlike many industries where a handful of major players dominate, the industry is composed of about 300 companies with combined annual revenue of about $6 billion.

"If you put the whole industry together, you still wouldn't have one Fortune 500 company," said David Kopel, an analyst at the Cato Institute.
But two of the most recognized names -- Sturm, Ruger and Smith & Wesson Holding Corp. (NASDAQ: SWHC) - might be worth a look.

Both are pure plays on the business of manufacturing firearms and ammunition. Both are considered small caps, with a total valuation under $1 billion.

And both have seen their stock prices soar recently. Over the past 12 months, SWHC's stock price is up a whopping 132% while RGR has posted a 123% increase.

That has catapulted Smith & Wesson to a sky-high P/E of 126, and 5 times book value.

Meanwhile, Ruger is trading at a more reasonable, but still expensive P/E of 24.

In other words, you might want to wait for the market to correct a bit before plunging in.

But companies like Smith & Wesson and Ruger are still in the bullseye of gun demand.

Election-year politics and an uncertain economy could make it a memorable year for gun owners and gun stock investors alike.

Source :http://moneymorning.com/2012/04/11/investing-in-guns-stocks-boom-times-for-sturm-ruger-rgr-and-smith-wesson-swhc/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014