President Obama’s gun control speech on Sunday sent gun stocks soaring the next day. His speech came on the heels of a spate of mass shooting incidents. Starting with the devastating terrorist attack in Paris last month, the fear of such incidents struck closer home once again last week. Last Wednesday was witness to the most devastating U.S. shooting incident in over three years.
Meanwhile, the Supreme Court refused to hear a challenge to a local gun control ordinance from gun-rights advocates. Local authorities may now find it easier to pass such regulations, which are encouraging consumers to stock up on guns. This in turn is pushing up stocks of gun companies with buyers eager to make purchases before stricter regulations come into force.
San Bernardino, Paris Incidents Spark Panic
On Dec 2, two individuals opened fire on a holiday party being held for employees of San Bernardino County Department of Public Health. A minimum of 14 people were killed and 17 others seriously injured. This was the most serious mass shooting incident in the U.S. in three years. In 2012, 20 children and 6 adults were shot dead at Sandy Hook Elementary School.
The San Bernardino incident follows close on the heels of the killing of three people at a Planned Parenthood clinic in Colorado. Last month, around 130 people were killed and hundreds of others injured on Friday evening in Paris, in what is France’s most devastating terror attack ever. Three teams of attackers carried out seven separate attacks in the country’s national capital.
Obama Asks for Stronger Controls, Supreme Court Weighs In
Calling the San Bernardino shooting an “an act of terrorism,” President Obama asked Congress to enact a law preventing any individual on a no-fly list from buying a weapon. He also asked Congress to create norms which make it tougher to purchase an assault weapon in the U.S.
The Supreme Court weighed in on Monday, refusing to consider a challenge to a local ordinance in Highland Park, IL. The ordinance prevents the sale or possession of any semiautomatic weapon which uses more than 10 rounds of ammunition. Experts believe that this will make it easier for those in favor of gun control to urge local authorities to create bans on assault weapons.
Gun Stocks Soar
Over the last few years, a sudden increase in sales of guns has been associated with apprehensions of stricter gun control regulations. This Black Friday saw the highest number of FBI background checks. Such a trend is usually indicative of brisk sales. It comes as no surprise that stocks of gun companies soared following Obama’s speech. Stocks of Sturm, Ruger & Co. Inc. RGR and Smith & Wesson Holding Corp. SWHC both gained in excess of 5% on Monday.
Smith & Wesson finished the day at its highest level in eight years, gaining in excess of a dollar over the day to end at $20.44. Sturm, Ruger gained $2.83 over the day to close at $57.50. Vista Outdoor Inc. VSTO, owner of Savage Arms and Federal Premium Ammunition, gained almost a dollar to close at $44.03. Even a stock like TASER International, Inc. TASR could gain in the days to come.
In Conclusion
With the fear of stricter gun control laws looming large, sales of guns are expected to continue their surge over the coming months. This will only send gun stocks even higher and it may be a good idea to train your sights on these companies in the weeks ahead.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment