Sturm, Ruger (RGR).
Shares of the manufacturer of hunting rifles and handguns fired nearly 12% higher midway through Thursday’s trade, and the catalyst for that explosive buying was the company’s announcement that it has to stop taking new orders due to overwhelming demand.
Sturm, Ruger said it has received orders for more than one million units, and that it therefore has temporarily suspended the acceptance of new orders. In its press release, CEO Michael Fifer said, “Despite the company’s continuing successful efforts to increase production rates, the incoming order rate exceeds our capacity to rapidly fulfill these orders.” For a manufacturer like Sturm, Ruger, this is a very good problem to have as it shows just how strong demand is for its product.
Investors betting on increased demand
The bullish response from investors to the Sturm, Ruger announcement wasn’t just confined to RGR shares. Traders also pulled the trigger and bought up shares of rival Smith & Wesson (SWHC). That company’s stock also surged more than 12% midway through Thursday trade, as investors are betting on the increase in demand throughout the firearms industry.
The best part of about these two companies, at least from an investor perspective, is that they aren’t really competing with each in terms of their core competency. Sturm, Ruger sells more hunting and recreational firearms, while Smith & Wesson specializes in sales to the military and law enforcement. That means investors can own both stocks and get exposure to the two main segments of the firearms industry.
Ammunition makers and retail stores
Another way to get your portfolio on target with the surge in gun industry demand is by owning related firms like one that makes ammunition, and one that operates retail stores where guns and ammo are sold.
Olin (OLN) is a maker of specialty chemicals, but its Winchester business produces and distributes shotgun shells, rimfire and centerfire ammunition for pistols and rifles, and reloading components for recreational shooters, hunters, law enforcement agencies and the U.S. military.
One of my favorite places to buy firearms, ammunition, targets and all of the other gear used by shooters is outdoor retailer Cabela’s (CAB). This store is a virtual one-stop shop for everything related to guns, but it also sells a vast selection of hunting gear, fishing gear and camping equipment.
If you want to take advantage of the big surge in demand for firearms that was made undeniably clear today by Sturm, Ruger, then you may want to take the shotgun approach by owning these four related gun stocks.