Prepare your portfolio for new gun laws
Today's Financial News - Posted April 16, 2009
The anti-gun sentiment is growing at a rapid pace. After taking over the banks and Detroit, is the nation’s gun industry Obama’s next target?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): The gun battles have begun. After a rash of killings over the past few weeks, politicians are seizing the opportunity to prey upon America’s emotions. They want to strike while the barrels are still hot.
As I picked up the morning’s newspaper, I realized the headline was sure to stir the angst of any Second Amendment supporter. In my home state of Pennsylvania, the governor, Ed Rendell, is calling on a reinstatement of the nation’s assault rifle ban.
Unfortunately, he is not alone. After the recent murder of three Pittsburgh police officers, the state’s mayors and police chiefs are calling for action as well. I can understand their viewpoint, but as a citizen of this country, I hope their mission fails.
And as an investor, my view stays the same. The more they talk, the more money you and I can make.
For proof, look at the two major publicly traded gun manufacturers here in the States, Smith & Wesson (NASDAQ:SWHC) and Sturm Ruger (NYSE:RGR). Both stocks are trading near 52-week highs.
Over the last six months (since we learned Obama would take the nation’s reins), shares of the companies have surged. Fearful gun owners cannot satiate their demand for weapons or ammunition. And greedy investors are willing to pay more and more for a stake at the cash flows generated by the buying frenzy.
Of course, there is nothing greedy about buying low and selling high or nothing wrong with working to protect your family and wealth if Washington suddenly decides to change the rules.
After all, they bought the banks and control Detroit. What’s stopping our lawmakers from seizing the gun industry? Anything is possible these days.
It’s normal to be afraid
It is exactly that sentiment that is sending shares of the above-mentioned companies into high-reaching territory. Since November, shares of Sturm Ruger are up close to 100%, while Smith & Wesson have surged by over 200%.
Is there more room to climb? You bet there is.
The anti-gun sentiment throughout the nation is growing thanks to the recent shooting sprees. As more and more governors and politicians jump on the bandwagon and as the nation’s media outlets turn a healthy debate into a dramatic feature story, the demand for firearms of all types will increase.
Prices of some firearms models have doubled or even tripled over the past six months. That is great news for companies like Smith & Wesson. Look for their profit margins to make a strong jump over the next several quarters.
In the long-term, this may be just another short-lived bubble, fueled by speculative hype. But in the short-term, there is plenty of buying opportunity.
Arm your home with a freshly minted firearm and arm your portfolio with a few shares of these popular industry players.
Next Article: Copper prices: Why is China super-sizing its stockpiles?
4 Responses to “Prepare your portfolio for new gun laws”
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April 16th, 2009 at 7:15 pm
” . . the state’s mayors and police chiefs are calling for action as well. I can understand their viewpoint . . ”
So can I . . . their “viewpoint” is that they are a bunch of ruling class elitists that want to disarm Americans so that they can steal from us and brutalize us even more with impunity, which is exactly why our Founding Fathers gave us the second amendment in the first place.
And they know all the while that their support for infringing on Americans’ second amendment freedom will do absolutely NOTHING to stop crimes of any kind. It never has, and it never will. It is sad that there are so many historcally ignorant American’s who will fall for this nonsense . . . at their own peril . . .
April 17th, 2009 at 4:08 am
Just curious. In an article about US gun makers and their stock potential why is it that you chose as your graphic an H&K submachine gun, a firearm manufactured in Europe and illegal for private ownership in this country?
April 17th, 2009 at 10:53 am
Gun bubble, just like housing and dot-coms. It will make for more than a few good deals on the used market if legislation fails to pass in the next year or so as the market of individuals buying on the wave instead of actually wanting to own a gun saturates. It sounds like the “buy gold” commercials on the radio.
Ammunition, on the other hand…
April 20th, 2009 at 12:31 pm
As long as we have the ability to defend ourselfs from tranny, we will be able to stop it..However if they ever get the guns away from freedom loving people our freedoms will also go.