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Gun stocks on the rise

Wednesday - 3/28/2012, 2:56pm  ET

The sales of handguns and ammunition has been on the slow rise over the last few years but the last few months have shown much higher sales. Retailers say it’s due to the upcoming presidential election while others speculate that it is simply the massive uncertainty rippling across our country and others.

The industry saw an uptick in sales in the months prior to President Obama’s election in 2008 which was based on the presumption of tougher gun regulations. The general consensus is that more regulations will come into play should the President be re-elected.

However, owners of Sturm, Ruger & Co stock and Smith & Wesson stock are not complaining. Ruger stock has nearly tripled since last summer and has witnessed a 14% increase this week alone. Smith & Wesson has seen a 125% rise in value since last year.

Ruger has taken orders for one million guns since the first of the year and have suspended any future orders until they catch up with the backlog. Smith & Wesson is experiencing similar circumstances.

The FBI’s National Instant Background Check System, a system used by federally licensed gun dealers used for background checks prior to sales, is one of the best indicators for national handgun sales. Statics through December 19, 2011 show 19 straight months of escalating sales.

Retailers that are involved with day to day sales of firearms cite a number of reasons for the steady business. Some state the turbulent economy enhancing the feeling of needing protection. Others state the belief that the President is not truly supportive of the Second Amendment.

The National Rifle Association (NRA) is supportive of the gun sales; however, there is some that think the NRA is purposely inflating stories of higher sales to further their agenda. Namely, Josh Horowitz the Executive Director of the Coalition to Stop Gun Violence. Horowitz believes the NRA would do anything to make the nation believe that firearms are a necessary part of life.

As far as Ruger and Smith & Wesson are concerned the backlog of orders says it all. Regardless of the reasons for the accelerated sales, business is booming and it is showing itself on the bottom line.

 

This article was originally published as Gun Stocks on the Riseon Fool.com

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