Ironic profits: Obama lines the pockets of gun makers
Today's Financial News - Posted March 2, 2009
Obama has created one of the strongest profit possibilities by accident. As the economy worsens and Americans fear for their rights, gun sales are soaring. It is not want the new president had in mind.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Americans are asking themselves questions that many thought they would never have to ponder. Should the government own the nation’s largest banks? Should major private enterprises rely on government loans? How low can it go?
And the scariest question of them all… do I need a gun?
According to the profits at the nation’s gun manufacturers, a growing amount of Americans are answering that question, not with a simple yes, but a question of how many guns do they need.
Last Friday, there was just one company out of thousands that was able to claim a 52-week high. While so many companies were testing the waters at the opposite end of the pool, Sturm Ruger (NYSE:RGR) was wrapping up an amazing week.
Shots fired
Over the last year, the firearms maker saw its order book grow by just shy of 50% from $156 million to over $233 million. Demand for the company’s products is flat-out soaring. In fact, it cannot keep up with demand. Out of the 776,000 units ordered, Sturm Ruger reports over 175,000 of them are on backorder.
It is not a bad position to be in when the economy is contracting.
The positive news was enough to send shares of Sturm Ruger soaring. During the weeks before last week’s earnings reports, shares were locked in a range centered on the $6.50 per share level. On Friday, they hit $9.49, a level investors have not seen since 2007.
If you have read my work with any consistency, you know I am a big fan of any vice-related investments, especially guns. The worse the recession, the more people will want their guns. Add in Obama’s anti-gun history into the mix, and you have a recipe for soaring success for the firearms industry.
Smith & Wesson (NASDAQ:SWHC) is trading for just half its 52-week highs, but is handing its investors the same sort of short-term gains. Over the last two weeks, shares of the gun manufacturer have jumped from just $2.52 to $3.82.
It is an ironic turn of events, but the folks that just may dislike Obama the most are the only ones making any money since he took office.
To take advantage of this trading action, think about buying shares of either company on any major dips. Today would be a good idea to start adding to your portfolio.
Next Article: Inflation agenda: An $81 billion tank of gas
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