Gun-Maker Stock Prices Rise with Uncertainty over 2012 Election
The major American gun-makers are the darlings of Wall Street right now. Smith & Wesson (SWHC) recently traded at $8.60 per share, a 52-week high, up from a 52-week low of $2.29. That’s a whopping 376% increase in stock price in one year! (Current SWHC price is $8.32.) Sturm, Ruger & Co., Inc. (RGR) traded today as high as $51.87, up from a 52-week low of $18.65 per share. That represents a 278% gain since this time last year. If you had invested in either S&W or Ruger a year ago, you would be sitting pretty right now. Check out SWHC’s stock price trends for the past 52 weeks:
Election-Year Fears Drive Gun Sales
What is driving the rising prices of gun-maker equities? Experts say the main factor is fear — Americans are afraid that, if President Obama is re-elected, he will force through tough new gun laws. That, in turn, is driving increased gun sales, which is good for the gun makers. With increased gun sales, revenues are up and profits are up — and that’s what Wall Street likes to see. S&W got a boost recently when a Wedbush stock analyst Rommel Dionisio re-confirmed S&W’s “Outperform” stock rating, and raised the target price from $7.00 to $10.00. Mr. Dioniso explained that gun sales are starting to rise dramatically because Americans are worried that President Obama will tighten gun laws if he earns a second term.
Other Wall Street “experts” are singing the same tune. Writing on the Motley Fool website, Wall Street reporter Bobbie Johnson opined: “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.”
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Tags: Motley Fool, Obama, Ruger, Smith Wesson, Wall Street
