Are you looking for your next great investment? Gun stocks are the way to go.
In the panic of Covid-19, gun stocks are soaring in interest and value, as Americans scramble to arm themselves for protection.
Retail sales of firearms blew through the roof this year, with sales up 24.8% and 36.4% in January and February respectively.
If you’re thinking that this gun-buying craze is just down to Covid-19, you don’t need to worry. The FBI’s stats on background checks show a spike in sales as far back as April 2019. The increase in civil unrest in America, and the chance of a Democrat takeover in November might also see the value of gun stocks explode.
We’ve put together a list of the publicly traded gun companies you need to know about. Scroll down, and decide for yourself if they’re worth investing in.
Which are the publicly traded gun companies you should know about?
The publicly traded gun companies you should know about are:
- Sturm Ruger
- Smith & Wesson
- Olin Corporation,
- Vista Outdoor.
- Sportsman’s Warehouse
- Axon Enterprise
- Big 5 Sporting Goods.
But how do you know which of these gun stocks works best for you as an investor? Let’s explore some of the main publicly traded gun companies, and help you get the best bang for your buck.
Sturm Ruger’s prospects have never looked better. One of the USA’s largest firearm brands, Sturm Ruger’s sales rose 36% in the second quarter. The company’s shares go for a reasonable 19 times next year’s projected earnings. As an investor, this is a discount compared with rival Smith & Wesson, who are trading at 25 times projected earnings. Given the current economic and political unrest in America, for example, the pandemic and a potential Democrat takeover in November, Ruger’s sales are likely to stay strong, as Americans rush to buy firearms and protect themselves.
Smith & Wesson
Smith & Wesson is one of America’s favourite and most iconic firearm brands. Smith & Wesson is a spinoff from American Outdoor Brands, a company which did fantastically well during the Covid-19 pandemic, which is a plus if you’re considering investing in this stock. Josh Enomoto from Investor Place says that one of the great factors of AOB stock like Smith & Wesson firearms, is “the company’s product portfolio… [which] has comprehensive solutions for all your home-defence needs”. American gun companies like Smith & Wesson are strong investments, because the gun industry’s manufacturing and distribution mostly occurs within the US. This protects gun companies from the uncertainty that firms with overseas production face.
Vista Outdoor’s decision to divest itself of its pure-play Savage Arms and Stevens firearms brand, was really bad timing. Less than a year before Covid-19 caused a huge surge in firearm sales, Vista Outdoor sold its firearms brand to focus on product categories such as ammunition and hydration bottles. Obviously, nobody could have predicted that a global pandemic would lead to such a dramatic spike in gun sales, and unfortunately, Vista Outdoor lost out. However, they still own their ammunition brands, which could still make them a relevant contender.
Olin Corporation is a global manufacturer and distributer of chemical products, which makes it an unlikely choice for investment in terms of gun stocks. However, its position as a U.S. manufacturer of ammunition means its stock could benefit from the huge increase in firearms sales. Olin’s Winchester ammunition brand is more expensive than the standard ammunition at a local gun ranges, but Josh Enomoto believes that – if we see more civil unrest and another spike in panic-buying – this won’t matter, as people will be grateful to get any ammo at all.
Sportsman’s Warehouse stores are extremely popular, making them a good bet for potential investors. The stores had lines out of the doors during the height of the Covid-19 panic. Investment Research company Zacks currently lists Sportsman’s Warehouse as a strong buy. Zacks also expects an above average return from Sportsman Warehouse shares in the next few months, so now might just be the time to invest.
Rather than classic guns and firearms, Axon develops Tasers. For the large majority of Americans who are opposed to firearms (60% favoured stricter gun laws in 2019), but still want to protect themselves, Axon Enterprise offers a useful solution, which makes it a potential contender. Tasers temporarily incapacitate assailants with non-lethal electric shocks, which allows the user to call law enforcement, rather than having to fatally injure anyone. However, Zacks currently ranks Axon at a 4 (sell), and they are expecting a below average return from Axon shares on the market in the next few months.
Big 5 Sporting Goods
Gun owners don’t usually think of Big 5 Sporting Goods when they want to buy a firearm. The company is primarily a retailer of sporting goods, a sector which has been prone to many bankruptcies in the past few years. This doesn’t bode too well for Big 5 Sporting Goods, or its potential investors. The guns that Big 5 do stock are usually hunting rifles and shotguns, a far cry from, say, Sturm Ruger’s classic, reliable firearms. That being said, people seeking self-defence in the case of political or virus-related upheaval, aren’t going to be gun aficionados, they’re just going to want any gun.