Tags: Smith | Wesson | Sturm | gunmaker | stock

Smith & Wesson Leads Rally by Gunmaker Stocks

Wednesday, 07 Nov 2012 02:53 PM


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Shares of gun makers Smith & Wesson Holding Corp. and Sturm Ruger & Co. rallied on Wednesday on speculation that gun enthusiasts will stock up because they fear newly reelected President Barack Obama will toughen gun laws.

Gun sales rose when Obama first won the presidency in 2008, and analysts expect to see a pop in demand again.

"The reelection of President Obama should drive political firearm sales," Benchmark & Co analyst Mike Greene said.

While gun makers' stocks rose in the months following Obama's first victory, those gains did not necessarily hold for investors.

Smith & Wesson's shares, for instance, soared 160 percent to $7.50 in the six months after the 2008 election but two years later had dropped 50 percent. In 2012, the stock has gained 135 percent, including Wednesday's 9.6 percent gain to close at $10.37.

Sturm Ruger has had a more consistent climb. It closed at $7.04 on Election Day in 2008 and 73 percent in the following six months. Two years later it had climbed an additional 89 percent. The stock has soared 43 percent this year, closing up 6.8 percent at $47.68 on the New York Stock Exchange on Wednesday.

The broader market, meanwhile, fell more than 2 percent on Wednesday.

During the second presidential debate last month, Obama appeared to endorse a ban on assault weapons if he were to win a second term.

But analysts were not convinced that anti-gun legislation is impending.

"The administration has not really lifted a finger in the last four years to tighten gun control legislation," said Wedbush Securities analyst Rommel Dionisio, who covers the gunmakers. "There is a consumer fear that Obama will tighten gun control legislation, but whether or not they will do it this time I don't know."

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