News Column

Trajectory of Gunmakers' Shares May Be Temporary

Feb 12, 2013

Matt Krantz

gun manufacturers

Guns have become a public enemy to many ever since the shootings at Sandy Hook Elementary School in Connecticut. But on Wall Street, they're winning more friends than ever.

Shares of gun manufacturers continue to move higher this year, extending their rallies in 2012, as investors expect revenue to soar as gun owners stock up.

Investors are piling into the gunmakers' shares despite the proposal of tighter gun control laws, which call for greater scrutiny on gun sales, in addition to a ban on highly profitable assault rifles.

The reason: The specter of tighter rules is prompting anyone who thought they might buy a gun to get it now.

And the gunmakers are certainly getting a short-term bump due to the spike in gun demand. Revenue at Smith & Wesson jumped 48% during the October 2012 quarter, the latest available, and revenue at Sturm Ruger rose 47 percent in the quarter ended in September.

While the gunmakers' stocks look cheap based on the current clip of sales, investors need to remember consumers' mad dash to buy guns may be temporary and stealing future sales.

Source: Copyright USA TODAY 2013

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