Should the United States have more stringent gun restrictions? It is far easier to get a weapon in the states than any other part of the developed world and the violence resulting from guns being far more prevalent than anywhere else. Despite this, political aversion to the issue makes it unlikely that any major reforms will be enacted anytime soon.
This reality has significant implications for the gun industry as a whole. Even though it has appeared for a number of years now that guns would not become any more difficult to obtain, that has not stopped paranoid enthusiasts from going out and buying up as many firearms as they can before President Obama has a chance to cut them off if reelected. (It should be noted that the only gun-related policy passed by President Obama was to allow unloaded guns in national parks and on Amtrak trains.) This has led to a dramatic rise in sales for major manufacturers in the industry and a coorelated rise in share price. Since August 2011, Smith & Wesson Holding Corp. (SWHC) has seen their shares rise 210% while competitor Strurm Ruger’s (RGR) shares are up 60%.
Although these companies have experienced an incredible rise over the last year, it appears now that gun sales are beginning to slow and many investors are betting sales will continue on a downward trend. On Wednesday, KeyBanc Capital Markets downgraded both of the aforementioned companies citing sales that they believe have peaked. Additionally, with four public shootings across America in the last month, the effect these events have on confidence in these companies is unpredictable. Beyond that though, a recent New York Times story detailed how more American’s are turning to Russia to purchase their rifles, citing them as simply being more reliable than anything made in the U.S.
Business Section: Investment Ideas
Whether or not you believe that guns should be harder to come-by, they have certainly been in the news lately. Based off of the fluctuation in share price recently, it is likely that a slowing in sales growth coupled with bad press has had a negative effect. How do you see gun sales trending in the near future? We compiled a list of the companies mentioned above along with a competitor.
1. Smith & Wesson Holding Corporation (SWHC, Earnings, Analysts, Financials): Offers metal processing services and manufactures firearms and handcuffs as well as apparel and sportsmen’s articles. Market cap at $561.84M, most recent closing price at $8.60.
2. Sturm, Ruger & Co. Inc. (RGR, Earnings, Analysts, Financials): Engages in the design, manufacture, and sale of firearms in the United States. Market cap at $869.67M, most recent closing price at $45.39.
3. Alliant Techsystems Inc. (ATK, Earnings, Analysts, Financials): Engages in the supply of aerospace and defense products to the United States government, allied nations, and prime contractors. Market cap at $1.65B, most recent closing price at $50.36.
Use the Turbo Chart to compare the performances of these stocks:
Written by Dan Connelly
Use Kapitall’s Tools: Looking for ways to analyze this list?
Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall’s tab navigation to browse through the data…
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Smith & Wesson Holding Corporation (SWHC, Chart, Download SEC Filings)
- Sturm, Ruger & Co. Inc. (RGR, Chart, Download SEC Filings)
- Alliant Techsystems Inc. (ATK, Chart, Download SEC Filings)
New to Kapitall?
1. New to the site? Click here to register for a free account, and gain access to more tools and data
2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly
3. Follow us on SeekingAlpha, Motley Fool, Nasdaq and Twitter
ABOUT KAPITALL WIRE
Kapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.
Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.
Gun sales on the decline? Yup, that's why Ruger had to stop taking orders for the first quarter this year. Parts accessiories and ammo are out of stock. All with prices at the highest level in 5 years. The more you talk about it, the more people will buy. First time gun ownership is at a peak also.
If you want to see why RGR share.prices have had major declines in the last few months, just look at the publicly revealed increases in short interest in RGR. Now 6 1/2 million shares shorted against a total float of 19 million. That's 1/3 of the total share have been shorted. Every time there is an upward movement, the price then falls back. Two weeks later when the short interest is finally revealed, it is up big time. I guess Wall Street just want to make sure the stock remains liquid. As a point of disclosure, I am long the stock for many years. I bought it for income under $5. I figure the dividends have more than paid for the shares.
If this is true, then I expect prices to drop so I can cross a few more items off my wishlist.
" get a weapon in the states than any other part of the developed world and the violence resulting from guns being far more prevalent than anywhere else."
What a lying or uninformed hack! Your mouth is full of Obama breast milk! Most of the gun shootings here in the USA happen in the libtarded "Gun Free Zones" and you're simply lying when you state that gun violence in the USA is more prevalent than "anywhere else in the world" I guess you don't get out much!
Since you're so informed why not educate us about the gun policy in Switzerland?
In FACT, the United States violent crime rate for 2010 was 400 per 100,000 population. That of western Europe 1,060 per 100,000. England's was 4,080.
The United States murder rate for 2010 was 2.8 per 100,000, our homicide rate 4.8, Western Europe's murder rate is 6.0 – and England claims about as many murders a year as the press reports in a month.
In FACT, the United States ranks between 28th and 40th among industrialized countries for murder and violent crime rates. While England ranks first, and various western European countries rank between fourth and seventeenth.
In FACT, two Americans in three have access to at least one gun. For England, that is one in 75, and for western Europe the percentage of citizens with access to a firearm ranges from one in 12 to one in 25.
The bottom line? More guns mean less crime. And those who wish to live in peace would be well advised not to forget it.
"Paranoid enthusiasts?" There are not enough of them to fuel this sales boom. Gun ownership, as well as concealed carry, is growing leaps & bounds in the general population, particularly among first-time women buyers. It is a cultural shift, boosted by cutbacks in police budgets by broke municipalities, increasing numbers of people who don't have jobs, and fading stigmas relating to guns. Handguns themselves are becoming smaller, lighter, easier to carry. Keybanc's analyst did not say sales are slowing. He said sales are so good that they must slacken at some point. To date, background checks are running 20% over year-ago levels. That's pretty healthy. As for recent shootings in the news, one thing that they seem to confirm is that neither likely presidential electee wants to risk taking any substantive action to restrict sales. Personally, I don't see an end to the trend of rising gun sales. They won't go up in a straight line, but the trend is solidly biased to the upside and it would take a lot for it to reverse.
"The bottom line? More guns mean less crime."
Ah, right: correlation = causation.
"…policy passed by President Obama was to allow unloaded guns in national parks and on Amtrak trains.)"
If you can't even get this part right, how can we trust any of your investment advice?
The "carry in national parks" was for LOADED guns; over Obama's objection, Congress forced the National Park Service to assimilate the laws of the state in which NPS properties are located, just as the U.S. Forest Service and many other agencies do.
Amtrak had long used an internal policy to ban all guns from their trains. Again, Congress forced them to allow unloaded, securely cased guns in checked baggage, exactly like it's always been legal on commercial aircraft.
Correct, unloaded in Amtrak, and loaded in national parks where state law permits. But all the same, the administration hasn't passed any laws that inhibit gun ownership, despite all fears of the contrary.
"The Senate voted on Wednesday to allow Amtrak passengers to carry unloaded and locked handguns in checked baggage, even though Amtrak officials had raised concerns that the proposal could present “numerous challenges.”" http://thecaucus.blogs.nytimes.com/2009/09/16/sen…
"Loaded guns will be allowed in Yellowstone, the Grand Canyon and other national parks under a new law… The law lets licensed gun owners bring firearms into national parks and wildlife refuges as long as they are allowed by state law." http://www.msnbc.msn.com/id/35484383/ns/us_news-l…
This is right up there with Goldie Locks and the three bears. Just like the KeyBank crap. Oh , and my gun store looks like that too…with rows of machine guns for Joe public to buy. If one were to push ("punch" is a bit much here) holes in this fairy tail where would you start?
oh, one other thing…Who in their right mind shorts RGR?
Their balance sheet is so clean I use it basically as a template for picking other stocks…seriously.
Obama is aware that he cannot restrict gun ownership before the election. He claims to be doing things "under the radar" when asked by Sarah Brady, and it's reasonable to wonder if that had to do with the Fast & Furious gun running scandal. That there is a still a brisk pace in gun sales in spite of the rotten state of the economy is telling enough. By the way, why did the author use that stock photo of machine guns in some military arsenal? I wonder if this article is more about politics than economics.