Right to Bear Arms: Chicks + Guns = Profits for Your Portfolio

  • Posted by
  • on April 28th, 2011

Betty Drapper Gun

 

Those of you who know Talented, knows she is an avid upland birds hunter and gun rights advocate. (Stop reading here, gentle reader if this offends.) I follow gun & ammo names like $RGR, $SWHC , $ATK , and I have to tell you I’m really liking the sector right now. In fact, $SWHC firearms division posted its first quarter of positive growth  after four quarters of declines. Moreover  $SWHC’s backlog spiked by over 100% to $74 million at the end of3Q 2011 from $32 million at the end of 1Q2011.  The Consumer segment handily outpaced FBI NICS data with 17% growth.Strong reaction to the Company’s latest product releases appears to be driving this increase, including such products as the BODYGUARD and Governor handguns, as well as the M&P 15 Sport tactical rifle (I so love the black guns). So what’s driving this latest growth of firearms in the consumer segment? Women. That’s right. After recent events like the tragedy in Tucson, AZ, many women are choosing to protect themselves with a firearm. And stocks are reacting in kind. Might be time to take a closer look at the sector.

FIREARM SALES GAINING MOMENTUM

WSJ: The gun business is on track to have its strongest growth in sales since 2008, according to the latest available data. Federally tracked gun sales rose more than 12.7% in the first quarter, demonstrating the strongest year-over-year growth rate for the gun industry in three years. The data are drawn from sales in gun stores that require a federal background check. In March, for instance, gun sales jumped 15%, according to figures from an industry trade group that analyzed data from the National Instant Criminal Background Check System, or NICS, a telephone-based check administered by the Federal Bureau of Investigation. “We have seen a continued, consistent increase in sales, based on the background checks for this year,” said Jake McGuigan, director of government relations for the National Shooting Sports Foundation, a trade group. U.S. wholesale gun sales for the consumer market were about $2.6 billion in 2009, based on taxes paid by manufacturers. “There are many other groups that say the industry is declining,” Mr. McGuigan added. “But based on what we see, there is a total increase in the market. More women are getting involved and we are seeing an increase in hunting licenses as well,” he said. Gun manufacturer Sturm, Ruger & Co.., , said gun retailers placed higher orders for Ruger products at a gun-industry show in January than they did at the same time last year. The company recently launched several new products, including the SR9c compact pistol and the SR40 striker-fired pistol. Ruger also raised prices on many of its products. Smith & Wesson Holding Corp.’s firearms division, which represents 86% of revenue, expanded 6% year over year in the third fiscal quarter, which ended Jan. 31. It saw “strong orders” in the consumer channel for firearms designed for concealed carry and personal protection, such as its Bodyguard .380 pistol and 38 revolver, it said. From 2009 to 2010, gun sales suffered in the weak economy, rising only about 2.7%, according to background-check data.

 

 


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