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6 Gun Stock Ideas As Background Checks, Sales Set Records

Chris Katje
·4 min read

Gun stocks were rallying ahead of the 2020 presidential election, and October sales and background checks set records — which could be positive for companies selling guns and ammunition.

Record Background Checks: The FBI reported a record number of background checks for firearm sales in October. Over 3.3 million background checks were performed versus 2.4 million in October 2019.

October marked the sixth month in 2020 that has seen more than 3 million background checks.

The October figure surpassed September’s 2.9 million background checks. The monthly record for background checks was 3.9 million in June 2020.  

Prior to 2020, December 2015 was the only month that had more than 3 million background checks.

In 2020, total background checks now stand at 32.1 billion, already surpassing the 2019 record of 28.4 million with two months to go.

The 2016 election also led to high background check numbers, with 27.5 million total background checks in the year, up from 23.1 million in 2015. 

Record Gun Sales: The National Shooting Sports Foundation said that October gun sales were up 60% to 1.77 million, according to Fox News.

“Never before have so many Americans chosen to exercise their right to firearm ownership, including the estimated 6.9 million who purchased a firearm for the first time this year,” said NSSF spokesperson Mark Oliva.

Another research firm, Small Arms Analytics & Forecasting, estimates October gun sales were up 65%. Their research shows 18.6 million guns sold year-to-date. More guns were sold from January through September this year (16.7 million) than in any other year.

The 2016 presidential election year set the previous record, with 16.6 million guns sold.

Related Link: Walmart Pulls Guns, Ammunition Off US Shelves On Fears Of Civil Unrest, Theft

Gun Stocks: Vista Outdoor Inc (NYSE: VSTO) sold its firearms business in 2019, but is still active in the shooting and hunting market, with ammunition brands and hunting and shooting accessories.

The company gets around 50% of its revenue from its ammunition portion of the business. The company’s hunting and shooting accessories represent 22%% of revenue.

Action sports and outdoor recreation brands like Camp Chef, Camelbak and Bell represent around 27% of annual sales.

In the first quarter, Vista Outdoor reported year-over-year growth of 10% and e-commerce growth of 40%. The shooting sports segment saw year-over-year growth of 8%.

The company will report earnings Nov. 5.

Olin Corporation (NYSE: OLN) is the leading manufacturer of ammunition in the United States and the global manufacturing leader in small ammunition.

The company’s other businesses also include being the No. 1 bleach and acid producer in North America and the No. 1 global supplier of epoxy materials.

In the second quarter ending June 30, Olin reported its Winchester business had its fourth consecutive quarter of year-over-year earnings improvement.

Olin will report earnings on November 4.

Sturm, Ruger & Company Inc (NYSE: RGR) stock is up 44% in 2020. The company is a leader in the sale of pistols, revolvers and rifles.

Last week, the company reported 54% year-over-year revenue growth for the third quarter. Net sales increased from $95 million to $145.7 million.

“Consumer demand showed no signs of letting up during the quarter as concerns about personal protection and home defense were stoked by civil unrest in some cities across the United States,” said CEO Christopher Killoy.

Smith & Wesson Brands (NASDAQ: SWBI) is a leader in the sale of pistols, revolvers and rifles. Shares are up 87% in 2020.

The company spun off its outdoor brands into American Outdoor Brands Inc (NASDAQ: AOUT) and is now a pure play firearms company.

The company reported recover quarterly revenue of $230 million for the first quarter.

The firearms division saw year-over-year sales growth of 141%.

Firearm Retailers: Sportsman’s Warehouse Holdings (NASDAQ: SPWH) is often thrown in with the gun stocks, as the company is a top retailer for the category.

The company’s second quarter saw record-breaking same store sales growth of 61%.

Total quarterly sales were up 79.9% year-over-year to $381 million for the second quarter. The company credited its hunting and shooting category for the strong quarter.

The company is expected to report quarterly earnings in December.

Academy Sports and Outdoors (NASDAQ: ASO) went public earlier this year. Shares priced at $13, lower than the initial price range of $15 to $17.

The company has 259 stores and covers the hunting, fishing and camping categories.

Outdoor sales saw growth of 47.3% year-over-year for the first six months of the year.

Firearms, ammunition and fishing were the drivers of the strong sales growth.

The company is expected to report its first quarterly earnings as a public company later this month.

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