Tags: firearms | stocks | gun shares | obama

3 'Undervalued' Firearms Stocks Worth Buying Now

3 'Undervalued' Firearms Stocks Worth Buying Now
(Dennis Flaherty/Getty Images)

By    |   Thursday, 28 July 2016 07:59 AM

Threatening gun control without being able to deliver is great for sales and the firearm makers’ stock price, USA Today explains.

And even though Americans already own more than 300 million guns, people fear legislation will soon limit their ability to purchase arms, so they rush out to acquire more, Investing.com explains. And that is good for three gun-related stocks, which Investing.com considers undervalued.

“These buying sprees, in turn, trigger rallies in the stocks of two publicly traded gun companies, Sturm Ruger & Co. (NYSE:RGR) and Smith & Wesson Holding Corp. (NASDAQ:SWHC). Yet, despite this oft-repeated pattern, the firearms makers sell at a below market price earnings ratio of 15x and 18x estimated 2016 earnings, respectively,” Investing.com reported.

“These relatively low valuations are probably a sign that, like gun buyers, institutional and retail investors believe there is a chance, however slight, that gun sales will be constricted by the government at some point in the future,” Investing.com’s Scott Fearon explained.

Smith & Wesson is up 30 percent year-to-date. Sturm is up 13 percent. Fearon also touts Taser International Inc. (NASDAQ:TASR). “The stock is up 50 percent this year and, with its dominant position in the body camera market for law enforcement agencies, I expect it to continue rising,” he said.

“When people feel vulnerable, they’ll spend whatever it takes to regain a sense of control. And if the last half of 2016 is as chaotic as the first, companies offering that comfort — even if it is merely psychological — will do a very brisk business,” he said.

USA Today agrees with such a theory and says eight years of threats by President Barack Obama of more stringent gun laws has been a financial windfall for firearms companies.

“Having a boogeyman like Obama to frighten your base is great for business. Since he was first elected president, the gun industry has been stoking fears that he'd confiscate guns and do away with the Second Amendment. And the money’s been rolling in faster than you can empty an AR-15 magazine at your nearby firing range,” USA Today reported.

USA Today offered stats that track Obama’s tenure, from the National Sports Shooting Foundation (NSSF), an industry trade group that represents 8,000 gun and ammunition manufacturers and dealers:

  • Gun industry jobs — 166,200 in 2008 to 287,986 in 2015.
  • Gun industry wages — $6.4 billion in 2008 to $14.5 billion in 2015.
  • Gun industry economic impact — $19.1 billion in 2008 to $49.3 billion in 2015.

“Job growth up 73%. Wages up 127%. Total economic impact up 158%. Thanks, Obama! And that’s peanuts compared with the bonanza that investors have reaped from gun stocks since Nov. 4, 2008. Both Smith & Wesson Holding Corp. and Sturm, Ruger & Co. are up more than 1,000%,” USA Today reported.

“So you’d have made 10 times your money in Smith & Wesson stock if you had invested eight years ago.”

(Newsmax wire services contributed to this report).

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Threatening gun control without being able to deliver is great for sales and the firearm makers' stock price, USA Today explains.
firearms, stocks, gun shares, obama
Thursday, 28 July 2016 07:59 AM
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