4 Gun Stocks to Buy in the Wake of Defunding Police, Looting and Shooting

Paul Dykewicz

Four gun stocks to buy in the wake of local governments defunding their police, allowing looting and not stopping increased shooting should benefit from a record 3,931,607 firearms background checks filed in June with the National Instant Criminal Background Check System (NICS) of the Federal Bureau of Investigation (FBI).

The four gun stocks to buy also include the ammunition companies that supply the bullets for the firearms that some investment experts prefer as a way to profit from the growth of that industry in uncertain times, since bullets must to be replenished during the life of a weapon. The monthly FBI background check numbers serve as a proxy for gun sales and indicate the interest in owning firearms is growing to unprecedented heights since the agency began keeping those records in November 1998.

The Minneapolis City Council voted on Sunday, June 7, to abolish and rebuild its police department after concluding it could not be reformed following the death of George Floyd, an African-American man who succumbed as a police officer kneeled on his neck for more than eight minutes and ignored pleas from the victim that he could not breathe. On the scene were three other officers, including two rookies, who did not intervene when the senior policeman continued to constrict Floyd’s breathing.

Uncontrolled Violence and Destruction Fuel Interest in Gun Ownership

The death led to protests not only in Minneapolis but in the victim’s hometown of Houston, as well as New York, Washington, D.C., and other major cities. Although many protests stayed peaceful, others turned violent and involved attacks on police and law-abiding citizens, destruction of millions of dollars in property, looting, shooting and senseless murders. Many protesters also jeopardized their health amid the COVID-19 pandemic by failing to social distance and wear protective masks to follow key recommendations of public health experts to avoid spread of the disease.

“The looting in many American cities has reminded everyone that the police cannot be everywhere at all times,” said Jim Woods, who leads the Successful Investing, Intelligence Report and Bullseye Stock Trader advisory services. “That means it is incumbent upon the citizen to provide for his or her own protection — and that means responsible gun ownership.”

Woods told me he likes small-cap ammunition maker AMMO, Inc. (POWW) as his top recommendation among gun stocks to buy. Shares in the stock have risen nearly 200% so far this year, he added.

Chart courtesy of www.StockCharts.com

“The company’s patented, non-incendiary illuminating rounds have become a favorite of law enforcement, the military and gun enthusiasts,” Woods said.

Jim Woods tests AMMO, Inc.’s Streak non-incendiary visual ammunition near the company’s headquarters in Scottsdale, Arizona.

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Interest in buying gun stocks grew in March after governors around the country imposed restrictions as the number of COVID-19 cases and deaths began to spread alarmingly along with social unrest. These four stocks to buy stand out for their potential in an industry that has taken on increased importance as tensions rose amid lockdowns, business closings and rioting that sometimes accompanied protests for racial equality, particularly fair treatment when African Americans are confronted by police.

Smith & Wesson Brands Is 1 of the 4 Gun Stocks to Buy 

Bryan Perry, who leads the Cash Machine, Premium Income, Quick Income Trader, Hi-Tech Trader and Breakout Profits Alert advisory services, told me he likes Smith & Wesson Brands Inc. (NASDAQ:SWBI), a Springfield, Massachusetts-based manufacturer of firearms and ammunition, along with Sturm Ruger & Co. (NYSE:RGR), a Southport, Connecticut, provider of guns for hunting, target practice and home protection.

Smith & Wesson announced on June 1 that it will split from American Outdoor Brands, Inc., creating a firearms business and a separate outdoor products and accessories provider. The spin-off of the outdoor products and accessories business will occur as a tax-free stock distribution to its stockholders in late summer 2020, with the formation of two independent publicly traded companies: Smith & Wesson Brands, Inc., and American Outdoor Brands, Inc.

“We believe that separating into two independent public companies will allow each organization to better align its strategic objectives with its capital allocation priorities,” said Chairman Barry M. Monheit, in a statement. “We also believe that this action will give the investment community clearer insight into the value creation potential in each of these independent companies, ultimately driving enhanced stockholder value.”

Chart courtesy of www.StockCharts.com

Sturm Ruger & Co. Makes List of 4 Gun Stocks to Buy

Sturm Ruger & Co., a firearm manufacturing company, produced quarterly results in May that topped analysts’ estimates as revenue grew more than 8% on a year-over-year basis to reach $123.6 million, while earnings per share gained nearly 18%. The stock also offers a 1.02% dividend yield.

Chart courtesy of www.StockCharts.com

Paul Dykewicz interviews Bryan Perry at the MoneyShow in Orlando, Florida.

Women Become Buyers of Guns as Their Personal Safety is Threatened 

My former colleague Emily Miller became a gun owner years ago after money was stolen from her purse by an intruder while she was housesitting in Washington, D.C. She navigated many gun registration obstacles to finally gain ownership of a firearm for personal protection.

A Cum Laude graduate from Georgetown University’s School of Foreign Service who served as a spokeswoman for former Secretary of State Colin Powell, Miller described her ordeal as a crime victim, fear of what may happen next and decision to learn how to use and buy a gun in her book, “Emily Gets Her Gun.” Miller, petite, athletic and opinionated, chose to learn how to defend herself, and she is far from alone as violence increasingly rages in many of America’s biggest cities.

I spoke to one female friend who recently went with seven other women to a gun range to learn how to shoot firearms. Each of the women took and passed a test to become eligible to apply to buy guns, even though none had any experience with such weapons, my friend told me.

Another Sharpshooting Company Earns Spot Among 4 Gun Stocks to Buy

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“Gun stocks can be tricky because people tend to stockpile weapons ahead of a perceived threat to regulate or restrict ownership,” said Hilary Kramer, host of a national radio program called “Millionaire Maker.” 

Columnist and author Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services included 2-Day TraderIPO Edge, Turbo Trader, High Octane Tradeand Inner Circle.

As a result, traditional gun stocks perform best in the market when lobbying efforts to control weapons are most vocal, continued Kramer, who leads the Value Authority and GameChangers advisory services. Gun sales tend to slow when such efforts and threats to America’s Second Amendment rights to keep and bear arms fade, she added.

“I’ve seen this pattern test shareholder confidence over the years, but the bright spot is always the ammunition makers,” Kramer said.  “The thing about ammo is that it gets used up and you need to buy more.”

Olin Corp. Ranks Among the 4 Gun Stocks to Buy

Kramer’s favorite gun stock is Olin Corp. (NYSE:OLN), which pays a 7.5% dividend yield and has been making Winchester cartridges since 1931. As a result, even if the stock goes nowhere, which she said was unlikely, investors should be rewarded for their patience. 

Chart courtesy of www.StockCharts.com

“OLN hasn’t cut its dividend or missed a payment in a quarter century,” Kramer said. “I see no reason for that to happen here.”

Bob Carlson, leader of the Retirement Watch advisory service and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, told me he generally prefers the ammunition stocks rather than the gun manufacturers. The sale of ammunition tends to be a more consistent than gun sales, he added.

Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz during an interview before social distancing became the norm after the outbreak of COVID-19.

COVID-19 Creates Further Havoc as Interest Grows in Gun Ownership

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Stocks achieved a huge recovery in the second quarter ended June 30 after a COVID-19-related market crash in first-quarter 2020. In fact, Q2 ended as the market’s top-performing quarter since 1998 and the best second quarter on record, with the S&P 500 climbing nearly 20%, while the Dow Jones Industrial Average and the NASDAQ Composite zoomed 17.5% and 30%, respectively.

The fallout of COVID-19 has led to 11,948,281 cases and 546,601 deaths globally, along with 3,097,084 cases and 133,972 lives lost in the United States, as of July 7. America has more than double as many cases and deaths of any other nation, including China, where COVID-19 originated. 

In addition, a one-day spike in cases occurred in Florida, Georgia, Idaho, Tennessee and Utah on June 26, following recent public protests, reopening of businesses and resumption of activities in which many people chose not to use protective masks and social distance, as recommended by public health officials. In Florida, at least 56 intensive care units at hospitals had hit capacity on June 7 and another 35 ICUs had less than 10% of their capacity remaining, according to the state’s Agency for Health Care Administration.  

These four gun stocks to buy provide investors with a chance to profit from the civil unrest that has gripped the country in recent months despite the COVID-19 crisis that caused public health experts to urge people to stay at home to avoid spreading the infection.  As so-called non-essential businesses reopen and begin to recall many workers who had been laid off during the recent lockdowns, investors still may profit with the four gun stocks to buy amid turbulent times as a presidential election approaches in November.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is endorsed by Joe Montana, Joe Theismann, Ara Paseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.

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