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June 3, 2020, 7:44 a.m. EDT

Gun stocks rally as continued surge in background checks, street violence stoke demand

Sturm, Ruger shares soar to highest level since before Trump was elected; Smith & Wesson’s stock powers toward 19-month high

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By Tomi Kilgore, MarketWatch


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Shares of gun and ammo makers surged again Tuesday, as data showing a continued surge in firearm background checks and reports of another night of street violence helped fuel investor demand.

The stocks’ rallies come after another night of protests following the police killing of George Floyd turned violent in some areas, with President Donald Trump threatening to mobilize the U.S. military to keep the peace.

Late Monday, federal police fired tear gas and rubber bullets to disperse a crowd before a 7 p.m. curfew went into effect, as Trump walked across the street to have a photo taken at the St. John’s Episcopal Church.

Also read : In New York, peaceful daytime protests give way to chaos as night falls.

Read more : Trump threatens to mobilize military to quell protests; crowd tear-gassed ahead of photo op.

Sturm, Ruger & Co. Inc.’s stock /zigman2/quotes/200036418/composite RGR -0.63%  jumped 4.4% to close at the highest level since April 2016.

Shares of the guns and ammunition maker have run up 17.1% amid a 3-day winning streak and have soared 51.3% this year.

Smith & Wesson Brands Inc.’s stock /zigman2/quotes/202273249/composite SWBI -2.05%  ran up 10.1%, to the highest close since September 2018. The firearm maker’s shares have hiked up 42.2% over the past 4 sessions and have powered up 61.5% year to date.

/zigman2/quotes/200036418/composite RGR 81.37, -0.52, -0.63%
/zigman2/quotes/202273249/composite SWBI 23.89, -0.50, -2.05%

Ammunition and outdoor products maker Vista Outdoor Inc.’s stock /zigman2/quotes/205852373/composite VSTO +1.42%  climbed 7.5% to the highest close since January 2019. The stock has run up 53.6% amid an 8-day win streak, the longest such streak since the 8-day stretch ended May 31, 2018. It has climbed 53.2% year to date, putting it on track for the first calendar-year gain since going public in January 2015.

Analyst Eric Wold at B. Riley FBR reiterated his buy rating on Vista, and boosted his stock price target by 30% to $13, citing increased confidence in recent demand trends

“Given the combination of this being a presidential election year along with the ‘stay-at-home’ environment creating more new gun owners and driving outdoor participation, we expected continued demand strength in the coming months/quarters,” Wold wrote in a note to clients.

See related : Digital Ally, Cemtrex and gun stocks power higher as social unrest fuels investor interest.

Analysts say the regulatory environment is among the biggest drivers of demand for guns, as fears of tighter regulations have often boosted gun sales and prices of gun stocks in the past. Demand for firearms and stock prices had dropped sharply during Trump’s presidency, as fears of tighter regulations had faded.

But amid concerns over the impact of a prolonged COVID-19 pandemic and as the 2020 presidential election approaches, demand for guns and gun stocks has surged. Sturm, Ruger and Smith & Wesson shares are currently headed for the best calendar-year gains since 2015, while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.44%  has dropped 9.8% this year and the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.77%  has lost 4.6%.

The latest National Instant Criminal Background Check System (NICS) data from the Federal Bureau of Investigation (FBI) showed May checks rose to 3,091,455 in May, up from 2,349,309 a year ago. That brings the 5-month total so far in 2020 to 15,250,460, compared with 11,547,389 over the same period a year ago.

Monthly background checks have now topped 3 million twice this year, in May and the 3,740,688 recorded in March. Since the FBI started providing the data in 1998, the only other month that checks topped 3 million was December 2015, when it reached 3,314,594. That was the month the San Bernardino, Calif. mass shooting that killed 14 people and wounded 17 others occurred.

/zigman2/quotes/200036418/composite
US : U.S.: NYSE
$ 81.37
-0.52 -0.63%
Volume: 305,223
July 31, 2020 4:00p
P/E Ratio
30.64
Dividend Yield
1.30%
Market Cap
$1.42 billion
Rev. per Employee
$270,839
loading...
/zigman2/quotes/202273249/composite
US : U.S.: Nasdaq
$ 23.89
-0.50 -2.05%
Volume: 1.29M
July 31, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.33 billion
Rev. per Employee
$316,336
loading...
/zigman2/quotes/205852373/composite
US : U.S.: NYSE
$ 17.15
+0.24 +1.42%
Volume: 835,431
July 31, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$995.80 million
Rev. per Employee
$370,951
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,428.32
+114.67 +0.44%
Volume: 491.37M
July 31, 2020 5:07p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,271.12
+24.90 +0.77%
Volume: 3.07B
July 31, 2020 5:07p
loading...

Tomi Kilgore is MarketWatch's deputy investing and corporate news editor and is based in New York. You can follow him on Twitter @TomiKilgore.

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