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10 Best Gun Stocks to Invest In

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·12 min read
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In this article, we will be looking at the 10 best gun stocks to invest in. You can skip our detailed analysis of the firearms industry, and go directly to the 5 Best Gun Stocks to Invest In.

Even before President Biden was elected into office, concerns about strictly enforced gun control and new firearm legislation had led to a surge in firearms and ammunition purchases. This buying frenzy was also propelled forward by the rising numbers of background checks being performed on firearms sales. As compared to 2019 numbers, there was a 60% rise in background checks on the sales of any firearms, bringing the total number of background checks to 21 million in 2020, according to the National Shooting Sports Foundation. Major gunmakers like Sturm, Ruger & Company, Inc. (NYSE: RGR), and Smith & Wesson Brands, Inc. (NASDAQ: SWBI) saw a surge in their net sales during last year as well. The former reported a 39% rise in sales as compared to net sales in 2019, while the latter saw its sales double in its fiscal third quarter.

Alongside these developments, both the companies also saw their shares rising, with Sturm, Ruger & Company, Inc. (NYSE: RGR) shares more than doubling between August 2019 and 2020, and Smith & Wesson Brands, Inc. (NASDAQ: SWBI) shares quintupling in value between September 2019 and August 2020. Add to this the rise in investor confidence where gun stocks were concerned since investors as well began seeing profits on these stocks in September.

Despite the above, the boom seen in gun stocks last year has begun to simmer down come summer 2021, as investors begin to question the upside in the firearms industry during the Biden administration with its increased focus on gun control and legislation. While shares of major gunmakers had risen last year, they have since fallen by about 21% for Sturm, Ruger & Company, Inc. (NYSE: RGR) and 10% for Smith & Wesson Brands, Inc. (NASDAQ: SWBI). According to David Trainer, the CEO of New Constructs, this fall can be attributed to a lack of investor confidence in the continuance of higher numbers of gun sales and growing market saturation in the industry.

However, the firearms industry remains an essential part of the US economy. According to the NSSF's Firearm and Ammunition Industry Economic Impact Report 2021, in 2020 alone, this industry contributed about $63.49 billion in economic activity to the country and is responsible for employing about 153,414 citizens while generating an additional 188,916 jobs in supplier and ancillary sectors as well. Therefore, we have compiled a list of the best gun stocks to invest in, including well-known industrial players like Olin Corporation (NYSE: OLN) and Vista Outdoor Inc. (NYSE: VSTO).

Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Best Gun Stocks to Invest In
Best Gun Stocks to Invest In

Photo by STNGR Industries on Unsplash

Without further ado, let's look at the 10 best gun stocks to invest in. The stocks added to our list below were selected on the basis of hedge fund sentiment, analysts' ratings, fundamentals, and growth potential based on core business strengths.

Best Gun Stocks to Invest In

10. AMMO, Inc. (NASDAQ: POWW)

Number of Hedge Fund Holders: 7

AMMO, Inc. (NASDAQ: POWW) is a designer, developer, and seller of ammunition and ammunition component products for handguns and long guns in the US and internationally. It offers STREAK Visual Ammunition for shooters to track bullet paths, among other products and ranks 10th on our list of the best gun stocks to invest in.

This June, Lake Street raised its price target on AMMO, Inc.'s (NASDAQ: POWW) shares from $9 to $11, keeping a Buy rating on the stock. The development came in light of AMMO, Inc.'s (NASDAQ: POWW) Q4 results surpassing analyst expectations, according to analyst Mark Smith.

On June 30th, in light of AMMO, Inc.'s (NASDAQ: POWW) released quarterly report, the stock gained 8% premarket because of the positive response received by its financial condition, as the company's revenue showed an over 400% growth year over year. Earlier, AMMO, Inc. (NASDAQ: POWW) signed a contract to design Ballistically Matched Multi-Purpose Rounds for US military operations. The company also confirmed its 2021 financial year guidance of $62 million in revenue versus the $62.25 million consensus, bringing projected year-over-year revenue growth to 319%.

In the fiscal fourth quarter of 2021, AMMO, Inc. (NASDAQ: POWW) had an EPS of -$0.01, missing estimates by -$0.01. The company's $24.20 million revenue, however, beat estimates by $0.25 million and surpassed the previous quarter's $16.62 million figure, and it has a gross profit margin of 19.57%. AMMO, Inc. (NASDAQ: POWW) has also gained 109.76% in the past 6 months and 150% year to date.

By the end of the first quarter of 2021, 7 hedge funds out of the 866 tracked by Insider Monkey held stakes in AMMO, Inc. (NASDAQ: POWW), worth roughly $5.71 million. This is compared to 4 hedge fund holders in the previous quarter with stakes worth about $569,000. Like Sturm, Ruger & Company, Inc. (NYSE: RGR), Smith & Wesson Brands, Inc. (NASDAQ: SWBI), Olin Corporation (NYSE: OLN) and Vista Outdoor Inc. (NYSE: VSTO), AMMO, Inc. (NASDAQ: POWW) is a good gun stock to invest in.

9. National Presto Industries, Inc. (NYSE: NPK)

Number of Hedge Fund Holders: 9

National Presto Industries, Inc. (NYSE: NPK) is a provider of houseware and defense and safety products in North America. The company's Defense segment manufactures 40mm ammunition, precision mechanical and electro-mechanical products, and medium caliber cartridge cases, alongside other products. This segment operates mainly under the US Department of Defense and DOD prime contractors. The company ranks 9th on our list of the best gun stocks to invest in.

National Presto Industries, Inc. (NYSE: NPK) has begun to see rising sales after the outbreak of the pandemic, with a 2.8% increase between the first quarters of 2019 and 2020, and a 20.42% increase year over year to $93.94 million in the third quarter of 2020, compared to the same quarter in 2019. National Presto Industries, Inc. (NYSE: NPK) has also been paying a regular annual dividend for 75 years, with a yield of 1%, and so the stock can be considered a good option for income investors as well. In the first quarter of 2021, National Presto Industries, Inc. (NYSE: NPK) had an EPS of $1.28, and its revenue was $62.67 million, up 26.55% year over year. The company has a gross profit margin of 23.69% and the stock has gained 5.24% in the past 6 months and 15% year to date.

By the end of the first quarter of 2021, 9 hedge funds out of the 866 tracked by Insider Monkey held stakes in National Presto Industries, Inc. (NYSE: NPK), worth roughly $72.2 million. This is compared to 9 hedge fund holders in the previous quarter with stakes worth about $65.7 million. Like Sturm, Ruger & Company, Inc. (NYSE: RGR), Smith & Wesson Brands, Inc. (NASDAQ: SWBI), Olin Corporation (NYSE: OLN) and Vista Outdoor Inc. (NYSE: VSTO), National Presto Industries, Inc. (NYSE: NPK) is a good gun stock to invest in.

8. American Outdoor Brands, Inc. (NASDAQ: AOUT)

Number of Hedge Fund Holders: 16

American Outdoor Brands, Inc. (NASDAQ: AOUT) is a provider of outdoor products and accessories for outdoor enthusiasts in the US and internationally. The company offers hunting, shooting, personal security, fishing, camping, and defense products. It ranks 8th on our list of the best gun stocks to invest in.

On June 28th, B. Riley increased its price target on American Outdoor Brands, Inc. (NASDAQ: AOUT) from $38 to $44. Analyst Eric Wold expects strong guidance and an upside quarter from the company, and the firm is of the opinion that the stock's valuation will rise greatly. B. Riley had begun coverage of American Outdoor Brands, Inc. (NASDAQ: AOUT) this March with a Buy rating. In the fiscal third quarter of 2021, American Outdoor Brands, Inc. (NASDAQ: AOUT) had an EPS of $0.82, beating estimates by $0.46. The company's revenue was $82.65 million, beating estimates by $23.68 million, and it has a gross profit margin of 45.95%. The stock has gained 75.93% in the past 6 months and 104.79% year to date.

By the end of the first quarter of 2021, 16 hedge funds out of the 866 tracked by Insider Monkey held stakes in American Outdoor Brands, Inc. (NASDAQ: AOUT), worth roughly $50.1 million. This is compared to 13 hedge fund holders in the previous quarter with stakes worth about $29.4 million.

Like Sturm, Ruger & Company, Inc. (NYSE: RGR), Smith & Wesson Brands, Inc. (NASDAQ: SWBI), Olin Corporation (NYSE: OLN) and Vista Outdoor Inc. (NYSE: VSTO), American Outdoor Brands, Inc. (NASDAQ: AOUT) is a good gun stock to invest in.

Curreen Capital mentioned American Outdoor Brands, Inc. (NASDAQ: AOUT) in its first-quarter 2021 investor letter. Here's what they said:

“American Outdoor builds brands in the firearms, hunting, and camping accessories markets. American Outdoor spun out of Smith & Wesson in August 2020. The business outpaces the competition, taking share in a large, fragmented and attractive market. Management reinvests free cash flow into growing the business.”

7. Big 5 Sporting Goods Corporation (NASDAQ: BGFV)

Number of Hedge Fund Holders: 14

Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is a sporting goods retailer in the western US. The company sells equipment for hunting, alongside other outdoor sports equipment and a selection of firearms. It ranks 7th on our list of the best gun stocks to invest in.

This May, Big 5 Sporting Goods Corporation (NASDAQ: BGFV) declared a new quarterly dividend of $0.18 per share and a special dividend of $1 per share, the news of which, combined with its positive first-quarter results where the company surpassed all estimates resulted in the stock rapidly gaining. Seeing as the stock is a dividend-yielder with a 3% yield, it is also a good choice for income investors. Big 5 Sporting Goods Corporation's (NASDAQ: BGFV) comparable sales rose by 31.8% in the first quarter versus the 20.5% consensus estimate and its EBITDA was $30 million, versus the $20 million consensus.

In the first quarter of 2021, Big 5 Sporting Goods Corporation (NASDAQ: BGFV) had an EPS of $0.90, beating estimates by $0.40. The company's revenue was $272.81 million, beating estimates by 12.62 million, and it has a gross profit margin of 34.57%. Big 5 Sporting Goods Corporation (NASDAQ: BGFV) has a forward PE ratio of 7.11 and it has gained 97.78% in the past 6 months and 136.52% year to date.

By the end of the first quarter of 2021, 14 hedge funds out of the 866 tracked by Insider Monkey held stakes in Big 5 Sporting Goods Corporation (NASDAQ: BGFV), worth roughly $27.07 million. This is compared to 17 hedge fund holders in the previous quarter with stakes worth about $15.8 million.

Like Sturm, Ruger & Company, Inc. (NYSE: RGR), Smith & Wesson Brands, Inc. (NASDAQ: SWBI), Olin Corporation (NYSE: OLN) and Vista Outdoor Inc. (NYSE: VSTO), Big 5 Sporting Goods Corporation (NASDAQ: BGFV) is a good gun stock to invest in.

6. Smith & Wesson Brands, Inc. (NASDAQ: SWBI)

Number of Hedge Fund Holders: 18

Smith & Wesson Brands, Inc. (NASDAQ: SWBI) is a manufacturer and seller of firearms across the globe. The company offers handguns, including revolvers and pistols, long guns, including sporting rifles, bolt action rifles and muzzleloaders, and other products. It ranks 6th on our list of the best gun stocks to invest in.

This June, Lake Street raised its price target on Smith & Wesson Brands, Inc. (NASDAQ: SWBI) from $34 to $43 with a Buy rating on the shares. Analyst Mark Smith has commended the company's strong quarter with "record" results.

Smith & Wesson Brands, Inc. (NASDAQ: SWBI) rallied this June by over 19.4% after the announcement of its highly positive earnings report, where the company revealed that its quarter saw a revenue tally of over $1 billion for the entire fiscal year for the very first time since the company's inception. The full fiscal year's net income of $244 million also set an all-time-high record, and shares of Smith & Wesson Brands, Inc. (NASDAQ: SWBI) have been able to beat the S&P 500 Index for the past year. Smith & Wesson Brands, Inc. (NASDAQ: SWBI)'s sales rose by about 67.3% in the fiscal fourth quarter to around $323 million, while its EBITDA was up 38.9% to reach $126 million. Smith & Wesson Brands, Inc. (NASDAQ: SWBI) also rewarded its shareholders with a 60% dividend boost.

In the fiscal fourth quarter of 2021, Smith & Wesson Brands, Inc. (NASDAQ: SWBI) had an EPS of $1.71, beating estimates by $0.63. The company's revenue was $322.95 million, up 38.23% year over year, and beating estimates by $63.14 million, while its gross profit margin is 43.38%. The stock has a forward PE ratio of 7.10 and it has gained 43.08% in the past 6 months and 65.51% year to date.

By the end of the first quarter of 2021, 18 hedge funds out of the 866 tracked by Insider Monkey held stakes in Smith & Wesson Brands, Inc. (NASDAQ: SWBI), worth roughly $99.6 million. This is compared to 20 hedge fund holders in the previous quarter with stakes worth about $111 million.

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Disclosure: None. 10 Best Gun Stocks to Invest In is originally published on Insider Monkey.