We list down the major gun stocks to watch so you can see if these are among the best stocks to invest in.
Gun Stocks To Watch Out: Are They Worth Investing In?
1. American Outdoor
American Outdoor Brands Corporation (NASDAQ:AOBC) manufactures items related to outdoor sports and recreation. Under it is Smith & Wesson, which is the company’s gun manufacturing arm. The company used to carry the name Smith & Wesson Holding Corporation until it diversified in 2016 to accommodate other products. Sales on firearms account for 86% of the company’s revenue as of 2017, with a total of 420,000 long guns shipped out that year.
Why is this company under the list of gun stocks to watch out for? Shares of American Outdoor Brands shot up in August when it reported a spike in revenue and earnings per share. Analysts saw measures like fewer promotions and cost-cutting as catalysts for the company’s financial improvement. It was also observed that since the administration of President Donald Trump, prices of its items dropped by 53%, which affects prices and availability of its shares.
2. Sturm Ruger & Company
Sturm Ruger & Company Inc. (NYSE:RGR) is currently, as it claims, the largest manufacturer of firearms in America. It designs, manufactures, and sells items such as rifles, pistols, and revolvers. The company was the biggest seller of handguns from 2009 to 2012. It used to make golf club heads, beginning in 1995, until it decided to focus on firearms after a decade.
Why is this company under the list of gun stocks to watch out for? Similar to American Outdoor, Sturm Roger & Co. also experienced a spike in its stocks in late summer 2018. Its revenue declined due to lessened demand for firearms following the gun-related federal background checks. Also, its inventory dropped by 40% from the prior year. However, the company witnessed a rise in earnings per share as its prices dropped by 20% since Trump took office.
3. Vista Outdoor
Vista Outdoor (NYSE:VSTO) manufactures items related to hunting and shooting. Its shooting sports segment covers brands such as American Eagle, Blazer, CCI, Estate Cartridge, Fusion, and Independence. The company started in 2015 as a spinoff from the company Alliant Techsystems Inc.
Why is this company under the list of gun stocks to watch out for? The shares of this relatively young company jumped by up to 13.7% in August following the 7% drop in its revenue in the first-quarter of the 2019 fiscal year. It has seen drops in its sales after it ceased giving discounts on large item purchases, primarily on ammunition. Prices of firearms also dropped to 63% with the election of Trump. But the company is expecting sales between $2.10 billion to $2.16 billion for the full 2019 fiscal year and adjusted earnings between $0.15 to $0.35 per share.
4. Sportsman’s Warehouse
Sportman’s Warehouse Holdings Inc. (NASDAQ: SPWH) is a retail store that sells outdoor recreational gears, footwear, and apparel. It is open in 23 states across America. It filed for bankruptcy in 2011 due to financial crisis caused by declining sales, but the company has survived.
Why is this company under the list of gun stocks to watch out for? The company gained market shares after competitor companies like Kroger, Walmart, and Dick’s Sporting Goods promised to stop selling rifles in the market following the series of shooting incidents in schools in America. It has grown 6% year-after-year and was able to make up for its $0.14-per-share loss in the Q1 of this year by earning $0.15 per share in Q2.
Investors might want to look at shares on firearms as stocks to watch out for. Given the current issues such as gun control and ownership in America, as well as changes in firearms sales and demand, shares of gun manufacturers may (or may not be) the best stock to invest in the market.
Are gun shares among your top stocks to watch out for? Share with us your findings and analysis on gun stocks in the comments section below.