Stock markets around the world closed down on the last trading day of 2015, with the Dow suffering its first annual drop since 2008. But for the two largest stock market-listed gun manufacturers 2015 has been another great year – their value has doubled.
In a year marred with gun violence and peppered with calls for tougher gun control measures, Smith & Wesson and Sturm, Ruger and Company have been two of the best performing stocks in the US.
Over the year Smith & Wesson rose from $9.47 to $21.98. Sturm, Ruger and Company rose from $34.63 to $59.61. It’s not just 2015 that has been good for gun stocks. Over the past five years, stocks of Smith & Wesson increased in value sixfold while stocks of Sturm, Ruger and Company quadrupled in value.
By comparison, Apple stock remained almost unchanged over the past year and only doubled in value over the past five years, reaching about $105 a share this year compared with $46 in 2010.
Netflix, which has been named as one of the best performing stocks of 2015, performed as well as the US gun companies – more than doubling in value over the past 12 months and growing by 464% over the past five years, reaching $114 a share on Thursday compared with $25 in 2010.
Even as Smith & Wesson stock reached a record high share price earlier this month at $23.45, analysts say it is likely to go higher still in the coming months. Chris Krueger, a senior research analyst with Lake Street Capital Markets, puts Smith & Wesson’s price target at $27.
Sturm, Ruger & Company reached a record high in January 2014 at $80 a share.
Investors have a reason to be optimistic about the future of gun stocks. This past Black Friday saw a record number of background checks for gun sales. The 185,345 checks do not necessarily translate into sales, as not all checks result in a sale and multiple firearms can be bought with a single background check. However, manufacturers rely on the background checks to measure how the market is doing.
This November, the FBI ran 2.2m background checks for firearms. That’s 24% more than last year.
On a conference call with analyst following the 8 December earnings report, Smith & Wesson’s president and CEO, James Debney, mentioned Black Friday numbers four times. He called the numbers “particularly encouraging”.
“The consumer is out there, shopping for firearms, perhaps a little bit more strongly than we anticipated. So certainly, that’s a factor in our thinking going forward as well,” said Debney, referring to the Black Friday sales.
Gun shop owners across the country have been reporting that the demand for guns has remained strong well into December as Americans sought to buy firearms…